A loosening of Israeli curbs on goods allowed into Hamas-run Gaza helped its economy grow by an estimated 16% in the first half of 2010, an International Monetary Fund official said on Monday.
But the growth was "from a very low base" and it is unlikely to continue without a further easing of restrictions, said the official, Oussama Kanaan, the IMF's resident representative for the West Bank and Gaza. Discussing the findings of an IMF report to be presented at a September 21 meeting in New York of donors to the Palestinian Authority, Kanaan told Reuters real economic growth in the Palestinian territories was forecast at 8% in 2010 compared with 6.8% last year.
But the Palestinian Authority, which has held sway only in the West Bank since Hamas Islamists violently seized Gaza in 2007, faced "serious liquidity problems" this year, he said, "unless adequate donor aid is promptly disbursed".
The Western-backed PA has received billions of dollars of international aid in recent years - one of the factors that has driven West Bank economic growth which Kanaan estimated at 9% in the first half of the year.
In order to sustain that growth, Israeli authorities have to further relax curbs on Palestinian movement in the West Bank and lift restrictions on exports to Israel, donor aid must arrive on time and the PA must continue with its reform plan, Kanaan said.
The PA depends on international aid to fill a gap in finances projected at $1.2 billion this year. Kanaan put the shortfall at $0.4 billion for 2010.
He said the West Bank unemployment rate fell to 16% in the first half of 2010 compared with 18% in the same period in 2009. Gaza's rate was unchanged at 37%.
Kanaan said Gaza's 16% growth spurt in the six months to June had been driven by Israel's gradual easing of import restrictions, a policy formalized after an international outcry triggered by its lethal May 31 raid on a Turkish ship that was seeking to break a naval blockade.
The easing culminated in July in the "lifting of import controls on consumer goods and inputs for internationally-supervised investment and reconstruction projects", Kanaan said.
Israel said the blockade is necessary to prevent arms smuggling to Hamas, which it battled in a three-week war launched in December 2008 with the declared aim of halting cross-border rocket attacks.
It has maintained restrictions on imports of capital goods and raw materials for the private sector in Gaza, along with a ban on exports and curbs on the movement of Palestinians in and out of the territory.
Kanaan said the economic growth in Gaza was "unlikely to last if imports of private investment inputs and exports to Israel remain prohibited".
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