Palestinian economy in ‘crisis’ over Israel standoff: World Bank

The World Bank estimated that easing restrictions on such goods ‘could bring additional six-percent growth in the West Bank economy and 11 percent in Gaza by 2025.’ (AFP)
Updated 17 April 2019
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Palestinian economy in ‘crisis’ over Israel standoff: World Bank

  • The World Bank said the unresolved standoff deepened a ‘fiscal crisis’ that could increase the Palestinian Authority’s financial gap
  • The Palestinian Authority has seen a dramatic drop in direct foreign aid

JERUSALEM: The World Bank warned Wednesday of a deepening economic crisis in the occupied West Bank if the Palestinian Authority and Israel do not resolve a dispute over tax transfers.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
In February, Israel decided to deduct around $10 million a month from the revenues — the sum the PA paid families of prisoners or prisoners themselves serving time in Israeli jails — prompting the Palestinians to refuse any funds at all.
Israel sees the payments to those who have carried out attacks against Israelis as encouraging further violence.
The PA describes the payments as a form of welfare, while Palestinians venerate prisoners jailed by Israel as heroes for their cause.
In its Wednesday report, the World Bank said the unresolved standoff deepened a “fiscal crisis” that could increase the PA’s financial gap from $400 million in 2018 to one “exceeding $1 billion in 2019.”
“This is expected to choke economic activity, threatening to push the West Bank into negative growth,” the World Bank said.
“A resolution to the stand-off over clearance revenues is essential,” it said, referring to the tax transfers.
The bank also called for a change in Israel’s restrictions on Palestinian imports of so-called “dual-use goods” — products and technologies that can be used both for civilian and military purposes.
Israel bans 56 items from the West Bank and the Gaza Strip, and an additional 62 to Gaza only.
It has fought three wars with Palestinian militants in Gaza since 2008 and maintains a blockade on the enclave run by Islamist movement Hamas.
As a result of the restrictions, “the Palestinian economy is unable to access key production inputs and modern technology, challenging its ability to expand its production frontier and grow in a sustainable manner,” the report said.
The World Bank estimated that easing restrictions on such goods “could bring additional six-percent growth in the West Bank economy and 11 percent in Gaza by 2025.”
The bank’s report will be presented to the international donor group for Palestinians, known as the Ad Hoc Liaison Committee, at its meeting in Brussels on April 30.
It also noted “a continuous decline in real per capita income and a further rise in unemployment and poverty” in the Palestinian territories, with 52 percent of Gaza’s labor force jobless in 2018.
The Palestinian Authority has seen a dramatic drop in direct foreign aid, which has gone from 10 percent of gross domestic product five years ago to 3.5 percent last year.
In 2018, the United States cut hundreds of millions of dollars in Palestinian aid.


Oil slips 1% as US stockpiles surge, economic concerns grow

Updated 23 May 2019
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Oil slips 1% as US stockpiles surge, economic concerns grow

  • Crude futures already fell by around 2 percent the previous day
  • US crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd

SINGAPORE: Oil prices dropped by around 1 percent on Thursday, extending falls from the previous session amid surging US crude inventories and weak demand from refineries.
Brent crude futures, the international benchmark for oil prices, were at $70.36 per barrel at 0652 GMT, down 63 cents, or 0.9 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were down by 51 cents, or 0.8 percent, at $60.91 per barrel.
Crude futures already fell by around 2 percent the previous day.
“Rising inventories and a slowdown with refined product demand could suggest we could see further pressure (on prices),” said Edward Moya, senior analyst at futures brokerage OANDA.
US crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.
Commercial US crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.
Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of US strategic petroleum reserves (SPR) into the commercial market.
US crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.
Ole Hansen, head of commodity strategy at Saxo Bank, said “concerns about slowing (oil) demand growth due to the negative impact on the global economy of the US–China trade war” were also weighing on oil prices.
Countering these bearish price factors have been escalating political tensions between the United States and Iran, as well as ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that started in January in an effort to prop up the market.
“Large but opposing forces have kept Brent in a $70-$75 per barrel range in recent weeks,” Morgan Stanley said in a note on oil markets published this week.
“Macroeconomic data has rapidly deteriorated, and this is reflected in weaker oil demand. At the same time, downside risk to supply is materializing in key countries (adding to OPEC’s production cuts),” the US bank said.
“On balance, however, we still see tightness in 2H19,” Morgan Stanley said, adding it expected Brent to trade in the $75-$80 per barrel range in the second half of 2019.
French bank BNP Paribas said high inventories meant that OPEC would likely keep its voluntary supply cuts in place.
“Supply management is here to stay,” the bank said.