Gaza economy breathes in 2010

[Bilal Mahmud المكافح المخلص]

JERUSALEM - The easing of the Israeli blockade allowed the Gaza Strip's economy to grow 16 percent in the

Unemployment in Gaza remains above 35 percent

IMF says Gaza Strip’s economy grew 16 percent in first half of 2010 following easing of Israeli blockade.

first half of the year, an official at the International Monetary Fund (IMF) said on Monday.

But he cautioned that the growth came after years of strict closures that devastated the economy and said that continued expansion there and in the occupied West Bank depended on the further easing of restrictions.

"It's starting from a very low base after a very tight blockade," said Oussama Kanaan, the IMF representative in the West Bank and Gaza.

Unemployment in Gaza remains above 35 percent, one of the highest rates in the world, Kanaan said, and living standards are still well below their level in 1994, when the Palestinian Authority was created.

The latest growth figures, which compare the first half of this year to the same period in 2009, come from the findings of his mission and will be reflected in a report to be presented at a donors meeting in New York on September 21.

Israel began quietly easing its blockade of the Hamas-ruled territory in the spring and started allowing all purely civilian goods to enter after its deadly May 31 seizure of an aid flotilla sparked international outrage.

Israel and neighbouring Egypt first imposed the closures when an Israeli soldier was captured in June 2006 and tightened them when the Islamist Hamas movement -- sworn to Israel's destruction -- seized power a year later.

The West Bank economy meanwhile grew at a rate of nine percent during the same period as the Western-backed Palestinian Authority further reduced its dependence on foreign aid from 1.8 billion dollars (1.4 billion euros) in 2007 to 1.2 billion dollars (900 million euros) in 2010.

However, Kanaan said lower-than-expected donor aid had forced the PA to borrow extensively from local banks and left it with a 300 million dollar (240 million euro) financing gap for 2010.

He pointed out that the private sector is still hindered by closures and only has limited access to the 60 percent of the West Bank that is under the exclusive control of the Israeli military.

The findings come as Israeli and Palestinian leaders prepare to hold a second round of US-backed negotiations in Egypt on Tuesday after formally relaunching direct peace talks earlier this month.