PA employees wait for salaries in Gaza Strip
PA employees wait for salaries in Gaza Strip Abed Rahim Khatib/Flash90

The World Bank warned Tuesday that the Gaza Strip's economy is in "free fall" following cuts to aid and financial pressure by the Palestinian Authority in Ramallah.

The bank's report will be presented to the international donor group for the Palestinian Authority and Gaza, known as the Ad Hoc Liaison Committee, at its meeting in New York on Thursday on the sidelines of the UN General Assembly.

The meeting will coincide with the speeches to the assembly of both Palestinian Authority chief Mahmoud Abbas and Israeli Prime Minister Binyamin Netanyahu.

Already squeezed by the decline in trade with Israel following the Hamas takeover of the Strip in 2007 than decade-long Israeli blockade, Gaza's economy has been further weakened by US aid cuts and financial measures by Abbas's Palestinian Authority.

Abbas has been seeking to pressure the Hamas terror organization which controls Gaza, after Hamas expelled Abbas loyalists from the territory in 2007.

According to the World Bank, Ramallah has reduced its monthly payments to Gaza by some $30 million.

US President Donald Trump's administration has meanwhile cut more than $500 million in aid to the Palestinians, including ending all support for the UN agency for Arabs claiming status as “Palestinian refugees”.

"The economic deterioration in both Gaza and West Bank can no longer be counteracted by foreign aid, which has been in steady decline, nor by the private sector, which remains confined by restrictions on movement, access to primary materials and trade," the bank said.

Gaza's economy shrunk by six percent in the first quarter of 2018 "with indications of further deterioration since then," it said.

The bank said one in two Gazans now lives below the poverty line and that unemployment is running at 53 percent.

More than 70 percent of young people are jobless, it said.

"Increased frustration is feeding into the increased tensions which have already started spilling over into unrest and setting back the human development of the region's large youth population," said Marina Wes, World Bank director for the Palestinian Authority and Gaza.

The coastal enclave’s economy has steadily weakened since the Hamas terror organization ousted the Palestinian Authority in 2007.

Subsequent attacks by Hamas on Israeli targets in 2008, 2009, 2010, and 2014 led to Israeli reprisals and further erosion of the Strip’s economic stability.

Tensions escalated again between Gaza and Israel after terror groups including Hamas and Islamic Jihad orchestrated a series of riots and attempted infiltrations into Israel along the Israel-Gaza frontier beginning in March.

The resulting border clashes have been accompanied by period rocket and sniper attacks by Gaza-based terrorists, and the use of airborne incendiary weapons to destroy Israeli farmland near the Gaza frontier.