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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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Poverty and Inequality Rising Rapidly in Thailand: Report

Poverty, Inequality in Thailand on the Rise, World Bank Says

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"Taking the Pulse of Poverty and Inequality in Thailand," launched last week, says the country's poverty rate jumped from 7.2% to 9.8% between 2015 and 2018, adding nearly 2 million new people to the ranks of the poor. Pixabay

By Zsombor Peter

Thailand’s poverty rate has been rising in recent years despite steady, if slow, overall economic growth, a new World Bank report says, widening the gap between rich and poor in Southeast Asia’s second-largest economy.

“Taking the Pulse of Poverty and Inequality in Thailand,” launched last week, says the country’s poverty rate jumped from 7.2% to 9.8% between 2015 and 2018, adding nearly 2 million new people to the ranks of the poor. Inequality, as measured by household consumption, also spiked in 2016 for the first time in four years and has eased little since.

Analysts see a direct link between those figures and the results of last year’s general elections, Thailand’s first since a 2014 military coup led by then-General Prayut Chan-ocha, now the country’s prime minister.

Pheu Thai, a party tied to former Prime Minister Thaksin Shinawatra, won the second most votes and the largest share of seats in the popularly elected House of Representatives, the lower house of the National Assembly,  with strong support from some of the country’s poorest provinces in the North and Northeast.

A junta-appointed Senate and Election Commission finally tipped the contest to form a majority government in Prayut’s favor, but the numbers echoed the lasting disaffection of the country’s poor.

“Plummeting incomes were clearly a major factor in the opposition’s strong showing in the 2019 general election. That is why Pheu Thai did so well — especially given  that rural farmers and also urban households continue to be attracted by the populism of Thaksin,” said Paul Chambers, a political analyst and lecturer at Thailand’s Naresuan University.

Thaksin was first elected prime minister in 2001, after the shock of the Asian financial crisis of the late 1990s, and reelected four years later only to be kicked out of office by a military coup in 2006. The telecoms tycoon now lives abroad, avoiding a 2008 corruption conviction that he disputes. However, the subsidies, cash transfers and other populist policies he pushed have left him and his proxies with a loyal following among the farmers of Thailand’s rural North and Northeast, who feel left behind by an urban elite cloistered mostly in the capital, Bangkok.

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The World Bank said many of Thailand’s poverty spikes coincided with regional or global financial crises or with drought but added that periods of political instability also tend to depress consumption and investment, which can drive incomes down and poverty rates up. Pixabay

“That is partly why Thaksin was able to rise in the early 2000s, because of grievances over this disproportionate allocation of resources,” said Harrison Cheng, an associate director with consulting firm Control Risks who follows Thailand.

He said the concentration of wealth and power in Bangkok has continued under Prayut.

The World Bank report backs him up. It shows poverty hovering steadily at about 2% between 2015 and 2018 in Bangkok while rising everywhere else, nowhere more so than in the strife-torn South. Riven by a Muslim insurgency, the South became the country’s poorest region in 2017, only just edging out the Northeast with a poverty rate of about 12%. The South again topped the Northeast in 2018 with a poverty rate just over 14%.

The report ascribes the latest rises in poverty and inequality to droughts, slow economic growth and falling incomes among both rural farmers and urban businesses.

The bank says Thailand has now seen four such spikes since 2000, more than any of the other nine Association of Southeast Asian Nations countries.

The report’s author, Judy Yang, attributes that, at least in part, to slow wage growth during the period, slower than in any of the bloc’s other large economies.

“If you are a household, what really pulls you out of poverty is getting a better-paying job, getting more income, getting labor market income,” she said.

What also sets Thailand apart is its political turmoil. The coup-prone country has seen four swings between military and civilian rule since 2006, governments cut short by controversial court orders and several rounds of mass protests, some of them deadly.

The World Bank said many of Thailand’s poverty spikes coincided with regional or global financial crises or with drought but added that periods of political instability also tend to depress consumption and investment, which can drive incomes down and poverty rates up.

Cheng, of Control Risks, said his conversations with clients confirm that Thailand’s volatile politics have kept many potential investors at bay, holding the economy back.

“A lot of the investors are staying away and taking a wait-and-see approach for a long, long time now,” he said.

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A man begs for money in central Bangkok, Thailand. VOA

“If they are not in Thailand already, they will be thinking very seriously about whether they should do so because what if there’s a change in government again? What if there are massive street protests like in 2013, 2014? Are you going to repeat the 2010 Bangkok standoff between the Red Shirts and the military?” he added, referring to Thaksin supporters by their color-coded apparel of choice.

Cheng said the constant and sudden turnover in governments has also fostered a habit of short-term policy prescriptions on poverty and inequality that have done more to soothe the symptoms than cure the causes.

Chambers and Cheng agreed that if the latest bout of bad numbers gets worse, Prayut’s problems will also be increased by swelling ranks of not just the poor but also of disenchanted voters.

The World Bank report proffers poverty and inequality figures only up to 2018 but adds that “trends beyond this year are not optimistic, given continued low economic growth rates and stagnant wages.”

Another severe drought devastated farmers last year as the country’s gross domestic product growth rank sank to 2.4%, its lowest since 2014. GDP forecasts for 2020 are even worse, owing much to the novel corona virus outbreak, which has hit the country’s important tourism sector hard.

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To counter those blows, Prayut’s government has ramped up and introduced new social welfare programs for the poorest households and last week approved a stimulus package expected to pump some $12.6 billion into the economy.

The World Bank recommends that authorities continue to strengthen the country’s safety net and create better jobs for low-income earners in the short term. In the longer term, it says giving all children equal access to health and education opportunities would be the best way to make future generations more prosperous and more equal. (VOA)