Palestine

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Palestine

[Source: NUSACC's U.S.-Arab Trade Outlook 2013]

In January 2010, eleven Palestinian entrepreneurs from the West Bank and Gaza specializing in software development, outsourcing, factory automation, and other facets of information and communication technology (ICT) explored business to business (B2B) opportunities with U.S. counterparts in Washington, DC. Supported by the U.S. Department of Commerce with organizational help from the National U.S.-Arab Chamber of Commerce (NUSACC), this visit was the first of its kind by the Palestinian Information Technology Association (PITA), which represents 80 major Palestinian ICT companies.

According to the PITA delegation, the ICT industry in the Palestinian territories is growing at an average of eight percent per year. In 2008, the sector contributed $250 million to the local economy – five percent of the Palestinian GDP.

Despite positive indicators, Palestine continues to be a tough sell for most American traders and investors. Gaza has stagnated under the ongoing Israeli military blockade and U.S. differences with Hamas, Gaza’s Islamic Resistance Movement. Only a fraction of the $4.5 billion in international aid pledged to Gaza in the aftermath of the Israeli invasion of 2009 has been delivered.

In the West Bank, governed by the Palestinian Authority, business is growing more robustly. The PA’s budget received $525 million in the first half of 2010, on top of nearly $1.4 billion in 2009 and $1.8 billion in 2008. On September 30, 2010 the World Bank delivered an additional $40 million grant to the Palestinian Authority while the U.S. provided an additional $150 million in November, bringing 2010 support and investment up to $600 million.

The number of newly registered West Bank enterprises in commerce and services has been steadily increasing, according to the PA Ministry of National Economy. In 2009, they jumped by over 38 percent with declared capital more than double that of 2008. Data from 2010 indicate similar levels of private sector growth. The 2008-2010 Palestine Reform and Development Plan gave a jumpstart to the private sector and launched several high-profile projects, such as superstores, an industrial park, and housing developments.

The Middle East Venture Fund, launched in December 2009 with a €5 million investment from the European Investment Bank in Luxembourg, is working with the ICT sector in the territories to develop an “ecosystem that fosters the formation, financing and growth of technology companies.”

Exports of “fair trade” products are increasing. In particular, olive oil from Palestine can now be found in high-end grocery stores and retail outlets around the United States.

The World Bank cited Israeli restrictions imposed on the movement of people and goods as the major hindrance to economic development. That includes curtailed access to land and water, the inability of investors to visit their investments, and bans on broadly defined “dual use” materials. Despite these strictures, economic activity is growing, and the World Bank noted that the fledgling nation is “well-positioned to establish a state.” A newly released IMF estimate forecasts 2010 Palestinian growth will reach eight percent, and a new baseline scenario forecasts combined West Bank/Gaza GDP growth to surge from eight percent in 2012 to 12 percent by 2013.

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