critical

Ramallah, occupied West Bank – The Palestinian economy is undergoing a severe downturn, driven by Israel’s continued assault on Gaza, intensified restrictions on movement and trade in the occupied West Bank, and a sharp decline in both domestic and external financial resources.

As the Palestinian government struggles to manage an escalating fiscal crisis, official data and expert assessments warn that the economy is approaching a critical threshold – one that threatens the continuity of state institutions and their ability to meet even basic obligations.

A joint report by the Palestinian Central Bureau of Statistics (PCBS) and the Palestine Monetary Authority (PMA), published in the Palestinian Economic Monitor for 2025, found that the economy remained mired in deep recession throughout the year.

According to the report, gross domestic product (GDP) in Gaza contracted by 84 percent in 2025 compared with 2023, while GDP in the occupied West Bank declined by 13 percent over the period. Overall GDP levels remain far below their pre-war baseline, underscoring the fragility of any potential recovery and the economy’s inability to regain productive capacity under current conditions.

The report documented a near-total collapse of economic activity in Gaza, alongside sharp contractions across most sectors in the West Bank, despite a modest improvement compared with 2024. It also recorded a decline in trade volumes to and from Palestine compared with 2023, while unemployment in Gaza exceeded 77 percent during 2025.

Withheld revenues and mounting debt

Palestinian Economy Minister Mohammed al-Amour said Israeli authorities are withholding approximately $4.5bn in Palestinian clearance revenues, describing the move as a form of “collective punishment” that has severely undermined the Palestinian Authority’s (PA’s) ability to function.

“The total accumulated public debt reached $14.6bn by the end of November 2025, representing 106 percent of the 2024 gross domestic product,” al-Amour told Al Jazeera.

The minister said the debt includes $4.5bn owed to the International Monetary Fund, $3.4bn to the Palestinian banking sector, $2.5bn in salary arrears to public employees, $1.6bn owed to the private sector, $1.4bn in external debt, and $1.2bn in other financial obligations.

“These pressures have had a direct impact on the overall performance of the public budget,” al-Amour said, contributing to a widening deficit and sharply reduced capacity to cover operational spending and essential commitments.

All of that has led al-Amour to conclude that the Palestinian economy is undergoing “its most difficult period” since the establishment of the PA in 1994.

Official estimates show GDP contracted by 29 percent in the second quarter of 2025, compared with 2023, while GDP per capita fell by 32 percent over the period. These figures align with a recent report by the United Nations Conference on Trade and Development (UNCTAD), which concluded that the Palestinian economy has regressed to levels last seen 22 years ago.

In response, al-Amour said the government was implementing an “urgent package of measures”.

“The government is rolling out a series of actions that include strengthening the social protection system, supporting citizens’ resilience in Area C [of the West Bank], and backing small and medium-sized enterprises and productive sectors, particularly industry and agriculture,” al-Amour said.

Official data show a sharp drop across nearly all economic activities. Construction contracted by 41 percent, while both industry and agriculture declined by 29 percent each. Wholesale and retail trade fell by 24 percent.

The tourism sector has been among the hardest hit. Following the start of Israel’s genocidal war on Gaza in October 2023, the Ministry of Tourism reported daily losses exceeding $2m, as inbound tourism nearly collapsed. By the end of 2024, cumulative losses were estimated at approximately $1bn.

The Palestinian Economic Policy Research Institute (MAS), citing PCBS data, reported an 84.2 percent drop in hotel occupancy in the West Bank during the first half of 2024 compared with the same period a year earlier. Losses in accommodation and food services alone amounted to roughly $326m.

Despite the downturn, al-Amour said the Ministry of Economy is focusing on sustaining the private sector, substituting Israeli imports across seven key sectors, developing the digital and green economies, and improving the business environment. He noted that about 2,500 new companies continue to be registered each year.

Tourism collapsing

Samir Hazbun, a lecturer at al-Quds University and board member of the Palestinian Federation of Chambers of Commerce and Industry, said repeated crises have hollowed out the economy.

“Over the past five years, all economic sectors have entered successive crises, starting with the COVID-19 pandemic and followed by the war on Gaza,” Hazbun said. “Tourism, one of the most important sectors, has been especially affected, exhausting the local economy and weakening its ability to recover.”

Hazbun said preliminary estimates indicate tourism has suffered direct losses exceeding $1bn, alongside extensive indirect losses resulting from the paralysis of hotels, souvenir shops, travel agencies, tour guides and street vendors.

He added that hotel investments alone are estimated at $550m, with no financial returns for owners, forcing many workers out of the sector due to the absence of job security and safety nets.

Economic expert Haitham Daraghmeh described Palestinian debt as “accumulated debt that increases monthly”, owed to banks, suppliers, contractors, and the telecommunications and health sectors.

“The withholding of clearance revenues is no longer a temporary financial crisis; it has become a factor of complete economic paralysis,” he said.

With external aid frozen and domestic revenues at historic lows, Daraghmeh warned that the government was “no longer able to cover salaries or operational costs”.

“The government is operating like an ATM, with no real capacity for investment or economic stimulus,” Daraghmeh added.

Economic warnings

Daraghmeh said World Bank reports warn that continued failure to pay salaries and meet obligations could trigger comprehensive economic collapse. While some countries, including France and Saudi Arabia, have pledged support, he said none of that assistance has materialised.

He outlined three possible scenarios; the most likely is a continued gradual decline, driven by ongoing revenue withholding and shrinking resources. The second involves international intervention to prevent total collapse, particularly at a decisive political moment. The third scenario could see a conditional breakthrough, tied to European demands for financial reform, anticorruption measures, curriculum changes and elections.

Taken together, the data and expert assessments suggest the Palestinian economy is approaching a dangerous tipping point. Analysts warn that without an end to revenue withholding, renewed international financial support, and a shift in the political context, the economy risks sliding from prolonged crisis into outright collapse.

The question facing Palestinian officials and economists alike is how long the system can endure under siege-like conditions – and whether political and economic shifts will arrive in time to halt what many now describe as a slow and deliberate economic unravelling.

ALLENTOWN, Pa. — When Idalia Bisbal moved to this Pennsylvania city synonymous with America’s working class, she hoped for a cheaper, easier life than the one she was leaving behind in her hometown of New York City.

About three years later, she is deeply disappointed.

“It’s worse than ever,” said the 67-year-old retiree, who relies on Social Security, when asked about the economy. “The prices are high. Everything is going up. You can’t afford food because you can’t afford rent. Utilities are too high. Gas is too expensive. Everything is too expensive.”

Bisbal was sipping an afternoon coffee at the Hamilton Family Restaurant not long after Vice President JD Vance rallied Republicans in a nearby suburb. In the Trump administration’s second high-profile trip to Pennsylvania in a week, Vance acknowledged the affordability crisis, blamed it on the Biden administration and insisted better times were ahead. He later served food to men experiencing homelessness in Allentown.

The visit, on top of several recent speeches from President Trump, reflects an increasingly urgent White House effort to respond to the economic anxiety voiced by people across the country. Those worries are a vulnerability for Republicans in competitive congressional districts like the one that includes Allentown, which could decide control of the U.S. House in next year’s midterms.

But in confronting the challenge, there are risks of appearing out of touch.

Only 31% of U.S. adults now approve of how Trump is handling the economy, down from 40% in March, according to a poll from the Associated Press-NORC Center for Public Affairs Research. Yet Trump has called affordability concerns a “hoax” and gave the economy under his administration a grade of “A+++++.” Vance reiterated that assessment during his rally, prompting Bisbal to scoff.

“In his world,” Bisbal, a self-described “straight-up Democrat,” responded. “In the rich man’s world. In our world, trust me, it’s not an ‘A.’ To me, it’s an ‘F,’ ‘F,’ ‘F,’ ‘F,’ ‘F,’ ‘F.’”

Agreement that prices are too high

With a population of roughly 125,000 people, Allentown anchors the Lehigh Valley, which is Pennsylvania’s third-largest metro area. In a dozen interviews last week with local officials, business leaders and residents of both parties, there was agreement on one thing: Prices are too high. Some pointed to gas prices while others said they felt the shock more at the grocery store or in their cost of healthcare or housing.

Few shared Trump’s unbridled boosterism about the economy.

Tony Iannelli, the president and CEO of the Greater Lehigh Valley Chamber of Commerce, called Trump’s grade a “stretch,” saying that “we have a strong economy but I think it’s not yet gone to the next stage of what I would call robust.”

Tom Groves, who started a health and benefits consulting firm more than two decades ago, said the economy was at a “B+,” as he blamed the Affordable Care Act, widely known as Obamacare, for contributing to higher health costs, and he noted stock and labor market volatility.

Joe Vichot, the chairman of the Lehigh County Republican Committee, referred to Trump’s grade as a “colloquialism.”

Far removed from Washington’s political theater, there was little consensus on who was responsible for the high prices or what should be done about it. There was, however, an acute sense of exhaustion at the seemingly endless political combat.

Pat Gallagher was finishing lunch a few booths down from Bisbal as she recalled meeting her late husband when they both worked at Bethlehem Steel, the manufacturing giant that closed in 2003.

Now retired, Gallagher too relies on Social Security benefits, and she lives with her daughter, which helps keep costs down. She said she noticed the rising price of groceries and was becoming exasperated with the political climate.

“I get so frustrated with hearing about the politics,” she said.

A front-row seat to politics

That feeling is understandable in a place that often gets a front-row seat to the national debate, whether it wants the view or not. Singer Billy Joel’s 1982 song “Allentown” helped elevate the city into the national consciousness, articulating simultaneous feelings of disillusionment and hope as factories closed.

In the decades since, Pennsylvania has become a must-win state in presidential politics and the backdrop for innumerable visits from candidates and the media. Trump and his Democratic rival in 2024, Kamala Harris, made several campaign swings through Allentown, with the then-vice president visiting the city on the eve of the election.

“Every race here, all the time,” Allentown’s mayor, Democrat Matt Tuerk, recalled of the frenzied race last year.

The pace of those visits — and the attention they garnered — has not faded from many minds. Some businesses and residents declined to talk last week when approached with questions about the economy or politics, recalling blowback from speaking in the past.

But as attention shifts to next year’s midterms, Allentown cannot escape its place as a political battleground.

Trump’s win last year helped lift other Republicans, such U.S. Rep. Ryan Mackenzie, to victory. Mackenzie, who unseated a three-term Democrat, is now one of the most vulnerable Republicans in Congress. To win again, he must turn out the Republicans who voted in 2024 — many of whom were likely more energized by Trump’s candidacy — while appealing to independents.

Mackenzie’s balancing act was on display when he spoke to the party faithful Tuesday, bemoaning the “failures of Bidenomics” before Vance took the stage at the rally. A day later, the congressman was back in Washington, where he joined three other House Republicans to rebel against the party’s leadership and force a vote on extending Obamacare subsidies that expire at the end of the year.

Vichot, the local GOP chairman, called Mackenzie an “underdog” in his reelection bid and said the healthcare move was a signal to voters that he is “compassionate for the people who need those services.”

A swing to Trump in 2024

Lehigh County, home to Allentown and the most populous county in the congressional district, swung toward Trump last year. Harris’ nearly 2.7-percentage-point win in the county was the tightest margin for a Democratic presidential candidate since 2004. But Democrats are feeling confident after a strong performance in this fall’s elections, when they handily won a race for county executive.

Retaking the congressional seat is now a top priority for Democrats. Gov. Josh Shapiro, a Democrat who faces reelection next year and is a potential presidential contender in 2028, endorsed firefighter union head Bob Brooks last week in the May primary.

Democrats are just a few seats shy of regaining the House majority, and the first midterm after a presidential election historically favors the party that’s out of power. If the focus remains on the economy, Democrats are happy.

The Uline supplies distribution factory where Vance spoke, owned by a family that has made large donations to GOP causes, is a few miles from the Mack Trucks facility where staff was cut by about 200 employees this year. The company said that decision was driven in part by tariffs imposed by Trump. Shapiro eagerly pointed that out in responding to Vance’s visit.

But the image of Allentown as a purely manufacturing town is outdated. The downtown core is dotted by row homes, trendy hotels and a modern arena that is home to the Lehigh Valley Phantoms hockey team and hosts concerts by major artists. In recent years, Latinos have become a majority of the city’s population, driven by gains in the Puerto Rican, Mexican and Dominican communities.

“This is a place of rapid change,” said Tuerk, the city’s first Latino mayor. “It’s constantly changing ,and I think over the next three years until that next presidential election, we’re going to see a lot more change. It’s going to be an interesting ride.”

Sloan writes for the Associated Press.

Dec. 19 (UPI) — An international hunger watchdog group said that while Gaza is no longer in famine conditions since the cease-fire between Israel and Hamas, it’s still food-insecure and many people still go hungry.

The Integrated Food Security Phase Classification, a United Nations-backed group, released a report Friday that said on X that at least 1.6 million people are still facing high levels of acute food insecurity.

It said that acute malnutrition is still critical in Gaza City and is serious in Deir al-Balah and Khan Younis with nearly 101,000 children under 5 likely to suffer acute malnutrition through mid-October 2026 throughout Gaza.

Israel’s foreign ministry called the IPC report “deliberately distorted” and “doesn’t reflect the reality in the Gaza Strip,” the BBC reported.

Between “600 and 800 aid trucks enter the Gaza Strip every day, 70 percent of them carrying food — nearly five times more than what the IPC itself said was required for the Strip,” the Israeli Foreign Ministry said in a statement.

Since the cease-fire, humanitarian agencies have been better able to get aid into Gaza, easing the famine that caused widespread hunger and malnutrition in the area during fighting, when Israel blocked aid from the Palestinians.

“Over the next 12 months, across the entire Gaza Strip, nearly 101,000 children aged 6-59 months are expected to suffer from acute malnutrition and require treatment, with more than 31,000 severe cases,” the report said. “During the same period, 37,000 pregnant and breastfeeding women will also face acute malnutrition and require treatment.”

UNWRA, the U.N. agency for Palestine, supported the report from the IPC.

“The latest report from the IPC info underscores how fragile the gains have been since the cease-fire began in October,” UNWRA said in a statement. “While Gaza Governorate is no longer classified as being in famine, 1.6 million people still face high levels of acute food insecurity. To end this catastrophe, supplies must be let in at scale and humanitarians allowed to do their job.”

Doctors Without Borders, known by its French initials MSF, has warned that babies and children in the Gaza Strip are dying from harsh winter weather, calling on Israel to ease its aid blockade as the military continues to violate the ceasefire and press on with its genocidal war.

Citing the death of a 29-day-old premature baby, Said Asad Abedin, from severe hypothermia in southern Gaza’s Khan Younis, MSF said on Friday that winter storms “combined with the already dire living conditions [are] increasing health risks”.

The death toll from extreme weather stood at 13 as of Thursday, according to Gaza’s Ministry of Health. Another two-week-old baby, Mohammed Khalil Abu al-Khair, froze to death without access to proper shelter or clothing earlier this week.

Ahmed al-Farra, head of the maternity paediatric department at Nasser Medical Complex, said in a video update that “hypothermia is very dangerous” for babies. “If nothing is offered for these families in the tents, for warming, for mobile homes, for caravans, unfortunately, we will see more and more” deaths, al-Farra said.

Children are “losing their lives because they lack the most basic items for survival,” Bilal Abu Saada, a nursing team supervisor at Nasser Hospital, told MSF. “Babies are arriving to the hospital cold, with near-death vital signs.”

In addition to the growing number of deaths, MSF said its staff has recorded high rates of respiratory infections that it expects to increase throughout the winter, posing a particular danger to children under five.

“As Gaza is battered by heavy rains and storms, hundreds of thousands of Palestinians continue to struggle in flooded and broken makeshift tents,” the organisation added. “MSF calls on Israeli authorities to urgently allow a massive scale up of aid into the Strip.”

No letup in Israeli attacks

Palestinian news agency Wafa, meanwhile, reported that Israeli forces demolished buildings, carried out artillery shelling and shot guns in areas east of Gaza City on Saturday morning, with more gunfire reported east of Khan Younis.

On Friday, an Israeli strike on a shelter for displaced Palestinians killed at least six people. The Israeli military claimed to be firing on “suspects”.

Graphic videos from the scene showed body parts and terrified civilians trying to carry wounded people out of danger.

Military vehicles also descended upon the town of az-Zawiya, located west of Salfit in the occupied West Bank, where forces severely beat and injured a number of citizens and stormed homes, the agency said.

‘I can still hear his tiny cries’

Heavy rain, high winds and freezing temperatures have battered Gaza in recent weeks, flooding or blowing away more than 53,000 tents that have served as makeshift shelters for displaced Palestinians.

With huge swaths of buildings and infrastructure destroyed, streets are quick to flood and sewage overflows. Displaced families have sought refuge in the shells of partially fallen-down buildings despite the risk of collapse, with 13 buildings caving in across Gaza last week.

The winter weather and Israel’s blocking of vital aid and mobile homes for shelter have proven deadly for children and babies.

Late in the evening of December 13, Eman Abu al-Khair, a 34-year-old displaced Palestinian living in al-Mawasi west of Khan Younis, found her sleeping baby Mohammed “cold as ice”, his hands and feet frozen and “his face stiff and yellowish”, she told Al Jazeera.

She and her husband couldn’t find transportation to get to hospital, and intense rain made it impossible to make the trek by foot.

After rushing Mohammed by animal-drawn cart to Red Crescent Hospital in Khan Younis at dawn, he was admitted to intensive care with a blue face and convulsions. He died two days later.

“I can still hear his tiny cries in my ears,” Eman said. “I sleep and drift off, unable to believe that his crying and waking me at night will never happen again.”

Mohammed “had no medical problems,” she added. “His tiny body simply couldn’t withstand the extreme cold inside the tents.”

Since the October 10 ceasefire took effect, Israel has continued to block the entry of humanitarian aid into the Gaza Strip despite calls from a host of United Nations agencies, international organisations and other states for it to stop.

The UN has said that Israel has prevented tents and blankets from reaching Palestinians, even as an estimated 55,000 families have seen their belongings and shelters damaged or destroyed in the storm.

Dozens of child-friendly spaces have also been damaged, affecting 30,000 children, according to the UN.

Natasha Hall, a senior advocate for Refugees International, told Al Jazeera that aid is entering Gaza in a “trickle” in part due to its opaque list of “controlled dual-use items” that has included nappies, bandages, tools, tents and other essentials.

“It’s unclear how those could be used as weapons or any kind of dual use,” Hall said.

SACRAMENTO — Gov. Gavin Newsom on Monday announced a new California-led public health initiative, tapping former U.S. Centers for Disease Control and Prevention officials who publicly clashed with the Trump administration, including the former agency chief who warned that the nation’s public health system was headed to “a very dangerous place.”

Newsom said the initiative will be led by Dr. Susan Monarez, the former CDC director, and Dr. Debra Houry, the CDC’s former chief medical officer. The pair will lead the Public Health Network Innovation Exchange, or PHNIX, which the governor’s office said will “modernize public health infrastructure and maintain trust in science-driven decision-making.”

The initiative was created to improve the systems that detect and investigate public health trends and build a modern public-health backbone that connects data, technology and funding across states.

“The Public Health Network Innovation Exchange is expected to bring together the best science, the best tools, and the best minds to advance public health,” Newsom said in a statement Monday. “By bringing on expert scientific leaders to partner in this launch, we’re strengthening collaboration and laying the groundwork for a modern public health infrastructure that will offer trust and stability in scientific data not just across California, but nationally and globally.”

Monarez will serve as strategic health technology and funding advisor for the initiative, helping advance private sector partnerships to better integrate healthcare data systems and enable faster disease surveillance.

“I am deeply excited to bring my experience in health technology and innovation to support PHNIX,” Monarez said in a statement shared by Newsom’s office. “California has an extraordinary concentration of talent, technology, and investment, and this effort is about putting those strengths to work for the public good — modernizing how public health operates, accelerating innovation, and building a healthier, more resilient future for all Californians.”

Houry was named senior regional and global public health medical advisor for PHNIX. Newsom’s office also announced it will work with Dr. Katelyn Jetelina, founder and chief executive of Your Local Epidemiologist. Jetelina will advise the California Department of Public Health on building trust in public health.

Monarez and Houry both described extraordinary turmoil inside the nation’s health agencies during congressional hearings, telling senators in September that Health and Human Services Secretary Robert F. Kennedy Jr. and political advisors rebuffed data supporting the safety and efficacy of vaccines. Monarez was fired after just 29 days on the job. She said Kennedy told her to resign if she did not sign off on new unsupported vaccine recommendations. Kennedy has described Monarez as admitting to him that she is “untrustworthy,” a claim Monarez has denied through her attorney.

“Dramatic and unfounded changes in federal policy, funding, and scientific practice have created uncertainty and instability in public health and health care,” Dr. Erica Pan, CDPH director and state public health officer, said in a statement. “I am thrilled to work with these advisors to catalyze our efforts to lead a sustainable future for public health. California is stepping up to coordinate and build the scaffolding we need to navigate this moment.”

The salaries of the new positions were not immediately known.

Newsom’s office said the California initiative would build on previously announced public health partnerships, such as the West Coast Health Alliance.