Linking the Gaza Strip with the West Bank
Distributional Impacts of COVID-19 in the Middle East and North Africa Region
COVID-19 is one of multiple crises to have hit the Middle East and North Africa (MENA) region in the decade following the Arab Spring. War, oil price declines, economic slowdowns, and now a pandemic are tearing at the social fabric of a region characterized by high rates of unemployment, high levels of informality, and low annual economic growth. The economic costs of the pandemic are estimated at about US$227 billion, and fiscal support packages across MENA are averaging 2.7 percent of GDP, putting pressure on already weak fiscal balances and making a quick recovery challenging. Even before the COVID-19 pandemic, MENA was the only region in the world experiencing increases in poverty and declines in life satisfaction. Distributional Impacts of COVID-19 in the Middle East and North Africa Region investigates how COVID-19 changed the welfare of individuals and households in the region. It does so by relying on phone surveys implemented across the region and complements these with microsimulation exercises to assess the impact of COVID-19 on jobs, income, poverty, and inequality. The two approaches complement and corroborate each other's results, thereby making the findings more robust and richer. This report's results show that, in the short run, poverty rates in MENA will increase significantly and inequality will widen. A group of 'new poor' is likely to emerge that may have difficulty recovering from the economic consequences of COVID-19. The report adds value by analyzing newly gathered primary data, along with projections based on newly modeled micro- and macrosimulations, and by identifying key issues that policy makers should focus on to enable a quick, inclusive, and sustained economic recovery.
Area C and the Future of the Palestinian Economy
This is the first report to systematically evaluate and quantify the economic potential of Area C, which constitutes approximately 61 percent of the West Bank. The report reveals that lifting the restrictions on economic activity in Area C could have a large positive impact on Palestinian GDP, public finances, and employment prospects. Among other things, access to economic activity in Area C is expected to be a key prerequisite for building a sustainable Palestinian economy. However, full potential of the Area C could be materialized only if other restrictions on free movement of goods, labor and capital are removed and the overall business environment in Palestinian territories has become more attractive. The economic significance of Area C lies in that it is the only contiguous territory in the West Bank, which renders it indispensable to connective infrastructure development across the West Bank, and a relative abundance of natural resources situated therein. Area C offers large potential for the development of several sectors of the Palestinian economy: agriculture, stone and mineral processing, cosmetics, construction, tourism, and telecommunications. The report shows that access to economic activity in Area C could increase the Palestinian GDP by as much as 35 percent, the majority of this impact would stem from agriculture and Dead Sea minerals processing industries, as well as the multiplier effect, which has been estimated at 1.5. Although the importance of building connective infrastructure through Area C is discussed in the report, the quantification of this impact is beyond the scope of this report. An increase in GDP of 35 percent, although thought to be a conservative estimate, would be expected to result in at least $800 million increase in tax revenues for the Palestinian authority, which would drastically reduce its dependence on donor aid for financing chronic budget deficits.
