TEL AVIV — Despite its ongoing problems, the Palestinian economy has recently shown significant signs of recovery.
It's particularly evident after a period of deep recession, economist Yitzhak Gal notes in an article published by a Tel Aviv University journal. The Palestinian Authority has faced the threat of collapse and, with it, the destruction of the economic and social fabric in Gaza and the West Bank. The peak of the downturn came during the second half of 2014 and the beginning of 2015, fueled by the war in Gaza and the Israeli government's withholding of Palestinian tax money.
The Palestinian Authority's debts to suppliers skyrocketed to $700 million by the end of 2014, compared to $260 million in 2012, and its debts to civil servants' pension funds stood at nearly $2 billion.
The transfer of taxpayer money from Israel to the Palestinian Authority resumed following Israel's parliamentary elections in March 2015, but it wasn't enough to address the acute distress.
Recovery has been evident in recent weeks as Gaza reconstruction has pushed forward at a faster pace. Before last summer's war, the Kerem Shalom checkpoint saw about 140 trucks of food and goods entering the Gaza Strip every day, but in recent months the number has more than doubled to about 300.
Many of these trucks have brought Gaza goods and construction materials from abroad. Palestinian merchants paid tax and customs for them to Israeli government coffers, and these were in turn transferred to the government in Ramallah.
Another reason for the economic recovery is a continued increase in the number of Palestinian laborers working in Israel and in Israeli settlements in the West Bank. There are various reasons for the growing demand, among them a number of road, railway and housing projects.
Whereas about 50,000 Palestinians were employed in Israel four or five years ago, the number today is twice that, which means that Palestinians represent about 15% of Israel's workforce. Income growth is also an optimistic sign.
Israel has aided the growth of Palestinian workers in Israel by introducing measures to facilitate crossing checkpoints, and Israeli officials say more measures soon will be introduced. Israel will also issue licenses to the thousands of illegal Palestinian workers in Israel and might even find a way to allow a few Gazans to enter and work in Israel.