Market Challenges
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- The West Bank and Gaza remain highly dependent on Israeli supplies and export opportunities. Almost all Palestinian imports and exports must go through Israel or Israeli-controlled checkpoints. The Israeli government regularly adjusts operations on short notice in response to major security incidents. Import clearance through Israeli customs and routine Israeli security checks can also result in lengthy delays.
- The Second Intifada that began in the fall of 2000 significantly damaged the West Bank and Gazan economic and commercial environment. Movement of goods into and out of Palestinian markets has been heavily restricted ever since, despite the end of the intifada in 2005.
- The June 2007 takeover of the Gaza Strip by Hamas resulted in the closure of borders with Israel and Egypt and the cessation of most trade between Gaza and the outside world, including the West Bank. In addition, Israeli security restrictions on the movement and access of goods and people between the West Bank, Gaza, and external markets continue to have a damaging effect on the private sector and limit economic growth. Periodically, tensions escalate between Hamas and Israel that affect the Gaza Strip and opportunities in this market.
- The Palestinian economy is small and heavily influenced by political events.
- The Standards Institute of Israel (SII) sets standards for all goods entering via Israel. Lengthy standards testing on products entering the West Bank and Gaza can delay shipments into Palestinian markets. The Palestine Standards Institution (PSI) plays a minor role because the Palestinian Authority (PA) has no control over borders and can only apply additional Palestinian standards on imports entering its areas.
- In 2021, the Israeli Ministry of Economy and Industry signed “An Israel Import and Export Decree (Import Groups)” which eases the conformity assessment requirements for imported products subject to Israel Mandatory Standards. According to the Decree, an importer’s declaration needs to be based on a test report issued by a laboratory which is accredited by an accreditation body under International Laboratory Accreditation Cooperation - ILAC. This reform makes it much easier to import many products based on an importer declaration. The process to implement this reform began in May 2021 and was completed in 2023.
- The inadequate provision of public goods including road infrastructure, utility networks, waste collection, and health provision across municipalities affect the welfare of the Palestinian economy.