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Unholy War: How Israel’s 2014 offensive has left Gaza in shambles

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Blockades, war and poor governance have strangled Gaza’s economy and the unemployment rate is now the highest in the world according to the latest World Bank economic update. The report will be presented to the Ad Hoc Liaison Committee (AHLC), a forum of donors to the Palestinian Authority, at the bi-annual meeting in Brussels on May 27, 2015.

The 2014 war has reduced Gaza’s GDP by about US$460 million. Construction, agriculture, manufacturing, and electricity sectors were hit the most with output reductions of 83 per cent in the construction sector in the second half of 2014 and roughly 50 per cent in these other sectors. Gaza became a major source of deficit and the fiscal burden on the Palestinian Authority’s finances amplified by the internal divide. While about 43 per cent of PA’s expenditures are spent in Gaza, only 13 per cent of its revenues come from Gaza.

The report estimates that Gaza’s GDP would have been about four times higher than it currently is if it weren’t for the conflicts and the multiple restrictions. It also states that the blockade in place since 2007 has shaved around 50 percent off Gaza’s GDP.  Unemployment in Gaza is the highest in the world at 43 per cent. Even more alarming is the situation of youth unemployment which soared to more than 60 per cent by the end of 2014.

“Gaza’s unemployment and poverty figures are very troubling and the economic outlook is worrying. The current market in Gaza is not able to offer jobs leaving a large population in despair particularly the youth,” said Steen Lau Jorgensen, World Bank Country Director for West Bank and Gaza. “The ongoing blockade and the 2014 war have taken a toll on Gaza’s economy and people’s livelihoods. Gaza’s exports virtually disappeared and the manufacturing sector has shrunk by as much as 60 per cent. The economy cannot survive without being connected to the outside world.”

Gaza’s real GDP is only a couple of percentage points higher now than it was 20 years ago in 1994, while the population growth is estimated to have increased by about 230 per cent over the same period. Consequently, real per capita income in Gaza is 31 per cent lower now than in 1994.

Gaza’s population suffers from poor access and quality of basic public services such as electricity, water, and sewerage.  Nearly 80 per cent of Gaza’s population receives some kind of social assistance, and nearly 40 per cent of them still fall below the poverty line. While shocking, these numbers fail to fully convey the difficult living conditions that nearly all Gaza’s residents have been experiencing.

“Even more shocking is the reality that most of Gaza’s 1.8 million residents are confined to an area of 160 km square and are not able to travel beyond this area without permits. According to the Washington-based Center for Mind-Body-Medicine, as many as one-third of Gaza’s children showed signs of post-traumatic stress disorder even before the 2014 armed conflict, now even more,” said Jorgensen.

Source: World Bank

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World Bank shareholders endorse capital increase plan

Following the capital increase plan announced Saturday, the combined financing arms of the World Bank

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The World Bank has said its shareholders endorsed a capital increase package, a series of internal reforms, and a set of policy measures to strengthen the international lender’s capabilities.

The $13 billion capital increase package includes $7.5 billion of paid-in capital for the International Bank for Reconstruction and Development (IBRD), the group’s primary lending arm, and $5.5 billion for the International Finance Corporation (IFC), the group’s private sector lending arm, said the World Bank in a statement on Saturday, Xinhua reported.

World BAnk shareholders to have better plans.

World Bank shareholders also endorsed a $52.6 billion callable capital increase for IBRD, the statement said.

“Through the historic agreement endorsed today, our shareholders have clearly demonstrated a renewed confidence in global cooperation,” World Bank Group President Jim Yong Kim said.

“This capital package allows for greater responsiveness to risks to global stability and security, particularly in poorer countries and fragile states,” Kim added.

Following the capital increase plan announced Saturday, the combined financing arms of the World Bank are expected to reach an average annual capacity of nearly $100 billion between fiscal year 2019 and fiscal year 2030, said the World Bank. Kim said at a press briefing this week that the capital increase package doesn’t target changes of loans to any specific country.

Also Read: India will become High-Middle Income Country by 2047, says World Bank CEO

“It’s about how we think about income levels and how the World Bank Group can continue to be a partner and to support all of our member countries who are still clients,” he argued. He said that the multilateral lender would increase lending to lower middle-income countries over time. IANS