Palestine is classified as a middle income and
developing country by the
IMF. In 2023, the
GDP of the country was $40 billion and
per-capita around $4,500. Due to its disputed status, the economic condition has been affected.
Carbon dioxide emissions were 0.6 metric tons per capita in 2010. In 2011, Palestine's
poverty rate was 25.8%. According to a new
World Bank report, Palestinian economic growth is expected to soften in 2023. Palestine's economy relies heavily upon
international aid,
remittances from overseas Palestinians and local industries. The State of Palestine's overall gross-domestic-product (GDP) declined by 35% in the first quarter of 2024, due to the ongoing war in Gaza, the Palestinian Central Bureau of Statistics (PCBS) reports. There was a stark difference between the West Bank, which witnessed a decline of 25% and in the Gaza Strip, the number is 86% amid the ongoing war. The manufacturing sector decreased by 29% in the West Bank and 95% in Gaza, while the construction sector decreased by 42% in the West Bank and essentially collapsed in Gaza, with a 99% decrease.
Agriculture After Israel occupied the West Bank and Gaza Strip in 1967, Palestinian agriculture suffered significant setbacks. The sector's contribution to the GDP declined, and the agricultural labor force decreased. The cultivated areas in the West Bank have continuously declined since 1967. Palestinian farmers face obstacles in marketing and distributing their products, and Israeli restrictions on water usage have severely affected Palestinian agriculture. Over 85% of Palestinian water from the West Bank
aquifers is used by Israel, and Palestinians are denied access to water resources from the
Jordan and
Yarmouk rivers. In Gaza, the coastal aquifer is suffering from
saltwater intrusion. Israeli restrictions have limited the
irrigation of Palestinian land, with only 6% of West Bank land cultivated by Palestinians being irrigated, while Israeli settlers irrigate around 70% of their land. The
Gulf War in 1991 had severe repercussions on Palestinian agriculture, as the majority of exports were previously sent to the countries of the
Arab Gulf. Palestinian exports to the
Gulf States declined by 14% as a result of the war, causing a significant economic impact. The division of groundwater is subject to provisions in the
Oslo II Accord, agreed upon by both Israeli and Palestinian leadership. Israel provides the Palestinian territories water from its own water supply and desalinated water supplies, in 2012 supplying 52
MCM. Generally, the water quality is considerably worse in the Gaza Strip when compared to the West Bank. About a third to half of the delivered water in the Palestinian territories is
lost in the distribution network. The lasting blockade of the Gaza Strip and the
Gaza War have caused severe damage to the infrastructure in the Gaza Strip. Concerning wastewater, the existing treatment plants do not have the capacity to treat all of the produced wastewater, causing severe water pollution. The development of the sector highly depends on external financing.
Manufacturing Manufacturing sectors in Palestine include textiles, food processing, pharmaceuticals, construction materials, furniture, plastic products, stone, and electronics. Notable products include clothing, olive oil, dairy, furniture, ceramics, and construction materials. Before the Second Intifada, Palestine had a strong industrial base in Jerusalem and Gaza. Barriers erected in the West Bank have made movement of goods difficult; the blockade of the Gaza Strip has severely affected the territory's economic conditions. , according to the
Ministry of Economy, the manufacturing sector expected to grow by 2.5% and create 79,000 jobs over the following six years. Palestine mainly exports articles of stone (limestone, marble – 13.3%), furniture (11.7%), plastics (10.2%) and iron and steel (9.1%). Most of these products are exported to Jordan, the United States, Israel and Egypt. Hebron is the most industrially advanced city in the region and serves as an export hub for Palestinian products. More than 40% of the national economy produced there. The most advanced printing press in the Middle East is in Hebron. Many quarries are in the surrounding region. Silicon reserves are found in the Gaza territory. Jerusalem stone, extracted in the West Bank, has been used for constructing many structures in Jerusalem. Hebron is widely known for its glass production. Nablus is noted for its
Nablus soap. Some of the companies operating in the Palestinian territories include
Siniora Foods,
Sinokrot Industries,
Schneider Electric,
PepsiCo and
Coca-Cola.
Israeli–Palestinian economic peace efforts have resulted in several initiatives, such as the
Valley of Peace initiative and
Breaking the Impasse, which promote industrial projects between Israel, Palestine and other Arab countries, with the goal of promoting peace and ending conflict. These include joint industrial parks opened in Palestine. The Palestinian Authority has built industrial cities in Gaza, Bethlehem, Jericho, Jenin and Hebron. Some are in joint cooperation with European countries.
Energy Palestine does not produce its own oil or gas. But as per UN reports, "sizeable reserves of oil and gas" lie in the Palestinian territories. Due to its state of conflict, most of the energy and fuel in Palestine are imported from Israel and other all neighboring countries such as Egypt, Jordan and Saudi Arabia. In 2012,
electricity available in West Bank and Gaza was 5,370
GW-hour (3,700 in the West Bank and 1,670 in Gaza), while the annual per capita consumption of electricity (after deducting transmission loss) was 950 kWh. The
Gaza Power Plant is the only power plant in the Gaza Strip. It is owned by Gaza Power Generating Company (GPGC), a subsidiary of the
Palestine Electric Company PLC (PEC). Jerusalem District Electricity Company, a subsidiary of PEC, provides electricity to Palestinian residents of Jerusalem. Government officials have increasingly focused on solar energy to reduce dependency on Israel for energy.
Palestine Investment Fund have launched "Noor Palestine", a project which aims to provide power in Palestine. Qudra Energy, a joint venture between
Bank of Palestine and
NAPCO have established solar power plants across
Jammala, Nablus, Birzeit and Ramallah. In 2019, under Noor Palestine campaign, first solar power plant and solar park was inaugurated in Jenin. Two more solar parks have been planned for Jericho and Tubas. A new solar power plant is under construction at Abu Dis campus of
Al-Quds University, for serving Palestinian Jerusalemites.
Oil and gas Palestine holds massive potential reserves of oil and gas. Over of oil are estimated to exist off the coast and beneath occupied Palestinian lands. The Levant Basin holds around of oil, with another beneath the occupied West Bank area. Around of oil reserves are believed to exist in shore of the Gaza Strip. According to a report by the
UNCTAD, around of oil reserves are in the occupied Palestinian territory of the West Bank, probably the
Meged oil field. As per the Palestinian Authority, 80% of this oil field falls under the lands owned by Palestinians. Masadder, a subsidiary of the
Palestine Investment Fund is developing the oilfield in the West Bank. It is estimated to have a P90 (a level of certainty) of of recoverable oil and of recoverable gas. Currently, an initial pre-exploration work program is underway to prepare for designing an exploration plan for approval, which will precede the full-fledged development of the field. It holds gas reserves ranging between to . The gas field was discovered by the
British Gas Group in 1999. Upon the discovery of the gas field, it was lauded by Yasser Arafat as a "Gift from God". A regional cooperation between the
Palestinian Authority, Israel and Egypt were signed for developing the field and Hamas also gave approval to the Palestinian Authority. However, since the
ongoing war in Gaza, this project have been delayed. Since then no airport has been operational in the country. Palestinians used to travel through airports in Israel –
Ben Gurion Airport and
Ramon Airport – and
Queen Alia International Airport of
Amman, capital of Jordan. Many proposals have been made by both the government and private entities to build airports in the country. In 2021, the most recent proposal was made by both the Palestinian government and Israeli government to redevelop Qalandia Airport as a binational airport for both Israelis and Palestinians. Gaza Strip is the only coastal region of Palestine, where
Port of Gaza is located. It is under naval siege by Israel, since the territory's blockade. During Oslo years, the Palestinian government collaborated with the Netherlands and France to build an international seaport but the project was abandoned. In 2021, then prime minister of Israel
Naftali Bennett launched a development project for Gaza, which would include a seaport.
Tourism Tourism in the country refers to
tourism in East Jerusalem, the West Bank and the Gaza Strip. In 2010, 4.6million people visited the Palestinian territories, compared to 2.6million in 2009. Of that number, 2.2million were foreign tourists, while 2.7million were domestic. Most tourists come for only a few hours or as part of a day trip itinerary. In the last quarter of 2012 over 150,000 guests stayed in West Bank hotels. 40% were European and 9% were from the United States and Canada.
Lonely Planet travel guide writes that "the West Bank is not the easiest place in which to travel but the effort is richly rewarded." Sacred sites such as the
Western Wall, the
Church of the Holy Sepulchre, and the
Al-Aqsa Mosque draw countless pilgrims and visitors each year. In 2013, Palestinian Authority Tourism minister
Rula Ma'ay'a stated that her government aims to encourage international visits to Palestine, but the occupation is the main factor preventing the tourism sector from becoming a major income source to Palestinians. There are no visa conditions imposed on foreign nationals other than those imposed by the visa policy of Israel. Access to Jerusalem, the West Bank, and Gaza is completely controlled by the
government of Israel. Entry to the occupied Palestinian territories requires only a valid
international passport. Tourism is mostly centered around Jerusalem and Bethlehem. Jericho is a popular tourist spot for local Palestinians.
Communications Palestine is known as the "Silicon Valley of NGOs". The high tech industry in Palestine, have experienced good growth since 2008. In 2020, the
Palestinian Central Bureau of Statistics (PCBS) and the
Ministry of Telecom and Information Technology said there were 4.2million cellular mobile subscribers in Palestine compared to 2.6million at the end of 2010. The number of ADSL subscribers in Palestine increased to about 363 thousand by the end of 2019, from 119 thousand over the same period. In 2020, 97% of Palestinian households had at least one cellular mobile line. At least one smartphone is owned by 86% of households (91% in the West Bank and 78% in Gaza Strip). About 80% of the Palestinian households have access to the internet in their homes and about a third have a computer. In June 2020, the World Bank approved a US$15million grant for the Technology for Youth and Jobs (
TechStart) Project aiming to help the Palestinian IT sector upgrade the capabilities of firms and create more high-quality jobs. Kanthan Shankar, World Bank Country Director for West Bank and Gaza said "The IT sector has the potential to make a strong contribution to economic growth. It can offer opportunities to Palestinian youth, who constitute 30% of the population and suffer from acute unemployment."
Financial services The
Palestine Monetary Authority has issued guidelines for the operation and provision of electronic payment services including e-wallet and prepaid cards. The
Protocol on Economic Relations, also known as the Paris Protocol was signed between the PLO and Israel, which prohibited Palestinian Authority from having its own currency. This agreement paved a way for the government to collect taxes. Prior to 1994, the occupied Palestinian territories had limited banking options, with Palestinians avoiding
Israeli banks. This resulted in an
under-banked region and a
cash-based economy. Currently, there are 14 banks operating in Palestine, including Palestinian, Jordanian, and Egyptian banks, compared to 21 in 2000. The number of banks has decreased over time due to mergers and acquisitions. Deposits in Palestinian banks have seen significant growth, increasing from US$1.2 billion in 2007 to US$6.9 billion in 2018, representing a 475% increase. The banking sector has shown impressive annual growth rates in deposits and loan portfolios, surpassing global averages. The combined loan facilities provided by all banks on 31 December 2018, amounted to US$8.4 billion, marking a significant growth of 492 percent compared to US$1.42 billion in 2007. Palestinian registered banks accounted for US$0.60 billion or 42 percent of total deposits in 2007. In 2018, the loans extended by Palestinian registered banks reached US$5.02 billion, representing 61 percent of total loans. This showcases a remarkable 737 percent increase between 2007 and 2018. Currently, Palestinian registered banks hold 57 percent of customer deposits and provide 61 percent of the loans, compared to 26 percent of deposits and 42 percent of loans in 2007. The Israeli restrictions imposed on
Area C alone result in an estimated annual loss of approximately $3.4 billion, which accounts for nearly half of the current Palestinian GDP. These restrictions have severely hindered economic growth and development in the region. In the aftermath of the
2014 Gaza War, where many structures were damaged or destroyed, the flow of construction and raw materials into Gaza has been severely limited. Regular exports from the region have been completely halted, exacerbating the economic challenges faced by the population. One of the burdensome measures imposed by Israel is the "back-to-back" system enforced at crossing points within Palestinian territories. This policy forces shippers to unload and reload their goods from one truck to another, resulting in significant transportation costs and longer transit times for both finished products and raw materials. Under the 1995
Oslo II Accord, it was agreed that governance of Area C would be transferred to the
Palestinian Authority within 18 months, except for matters to be determined in the final status agreement. However, Israel has failed to fulfill its obligations under the Oslo agreement. The
European Commission has highlighted the detrimental impact of the
Israeli West Bank barrier, estimating that it has led to an annual economic impoverishment of Palestinians by 2–3% of GDP. Furthermore, the escalating number of internal and external closures continues to have a devastating effect on any prospects for economic recovery in the region. In 2015, the economic impact of Israel's illegal use of Palestinian natural resources was conservatively estimated at US$1.83 billion, equivalent to 22% of Palestine's GDP that year. In a 2015 World Bank report, the manufacturing sector's share of GDP decreased from 19% to 10% between the signing of the
Oslo Accords until 2011. The same report, which adopted conservative estimates, suggests that access to Area 'C' in specific sectors like Dead Sea minerals,
telecommunications, mining,
tourism, and construction could contribute at least 22% to Palestinian GDP. The report notes that Israel and Jordan together generate around $4.2 billion annually from the sale of these products, representing 6% of the global potash supply and 73% of global bromine output. Overall, if Palestinians had unrestricted access to their own land in Area 'C,' the potential economic benefits for Palestine could increase by 35% of GDP, amounting to at least $3.4 billion annually. Similarly, water restrictions incurred a cost of US$1.903 billion, equivalent to 23.4% of GDP, while Israel's ongoing
blockade of the Gaza Strip resulted in a cost of $1.908 billion US$, representing 23.5% of GDP in 2010. == Demographics ==