(Bloomberg) -- The Palestinian economy is expected to grow 4% this year after taking a battering in 2020 from the pandemic and a drop in foreign aid.
The economy in the West Bank and Gaza contracted by 11.5% last year, hurt also in part by a temporary freeze of tax transfers from Israel, the Palestine Monetary Authority said in a report on Sunday. Israel collects tax revenues on behalf of the Palestinian Authority, an arrangement that was frozen for a few months last year in protest of an Israeli plan to annex chunks of the West Bank, where Palestinians see the heart of their future state.
Read more: Palestinians Resume Ties With Israel as Both Await Biden Era
The Palestine Monetary Authority warned that losing control over the pandemic and further political crises with Israel pose risks to its 2021 forecast. New coronavirus cases started to rise last week although at a much slower rate than the previous peak in April.
Palestinians have been grappling with the economic effects of the Covid-19 pandemic, which has left more than 3,600 people dead across the West Bank and Gaza, according to the Palestinian Ministry of Health. The slowdown in consumer and investment activity last year led to a 0.7% decline in prices and pushed up unemployment to 25.9%, with nearly 50% jobless in the Gaza Strip.
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