ing two marketing seasons have seen substantially lower prices
and sales. A decline in tourism in 2000 has also held back growth.
Unemployment and underemployment rates are extremely high. Shortrun
economic progress remains highly dependent on sustained bilateral
and multilateral aid, on responsible government economic management
as forwarded by IMF technical help and advice, and on expected
growth in the construction sector.
Gaza Strip
Economic output in the Gaza Strip - under the
responsibility of the Palestinian Authority since the Cairo
Agreement of May 1994 - declined by about one-third between 1992 and
1996. The downturn was largely the result of Israeli closure
policies - the imposition of generalized border closures in response
to security incidents in Israel - which disrupted previously
established labor and commodity market relationships between Israel
and the WBGS (West Bank and Gaza Strip). The most serious negative
social effect of this downturn was the emergence of high
unemployment; unemployment in the WBGS during the 1980s was
generally under 5%; by 1995 it had risen to over 20%. Israel's use
of comprehensive closures decreased during the next few years and,
in 1998, Israel implemented new policies to reduce the impact of
closures and other security procedures on the movement of
Palestinian goods and labor. These changes fueled an almost
three-year-long economic recovery in the West Bank and Gaza Strip;
real GDP grew by 5% in 1998 and 6% in 1999. Recovery was upended in
the last quarter of 2000 with the outbreak of violence, triggering
tight Israeli closures of Palestinian self-rule areas and a severe
disruption of trade and labor movements. In 2001, and even more
severely in 2002, Israeli military measures in Palestinian Authority
areas resulted in the destruction of capital plant and
administrative structure, widespread business closures, and a sharp
drop in GDP. Including West Bank, the UN estimates that more than
100,000 Palestinians out of the 125,000 who used to work in Israel,
in Israeli settlements, or in joint industrial zones have lost their
jobs. In addition, about 80,000 Palestinian workers inside the
Territories are losing their jobs. International aid of $2 billion
in 2001-02 to the West Bank and Gaza Strip prevented the complete
collapse of the economy and allowed Finance Minister Salam FAYYAD to
implement several
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