Correction: Palestinians-Economy story

RAMALLAH, West Bank (AP) ? In a story July 25 about the Palestinian economy, The Associated Press reported erroneously that the World Bank's assessment of the economy contradicts that of the International Monetary Fund. While a World Bank report found the Palestinian economy is currently not strong enough to support a state, both organizations agree that the Palestinians have made significant progress in building the financial institutions for a state but economic growth in the West Bank and Gaza cannot be sustained without the lifting of Israeli restrictions on movement and access.

A corrected version of the story is below:

World Bank says Palestinian economy unsustainable

World Bank report says Palestinian economic growth unsustainable due to foreign aid reliance

RAMALLAH, West Bank (AP) ? The Palestinian economy's recent growth is unsustainable because of its heavy reliance on foreign aid, a World Bank report said Wednesday.

For the past two decades, donor countries have propped the Palestinian economy by giving billions of dollars. The report said such aid has led to 7.7 percent gross domestic product growth between 2007 and 2011.

The growth has been primarily in government services, real estate and other non-tradable sectors. In contrast, the report said manufacturing and agriculture have dropped significantly.

The report said sustainable growth will come only through an emphasis on trade, integration and creating a dynamic private sector. The bank urged Palestinians to follow the example of East Asian countries that have achieved steady growth through exports, saying those that have focused on local markets have stagnated.

The study's author, John Nasir, said the Palestinian Authority has made steady progress toward establishing a future state, "but the economy is currently not strong enough to support such a state."

"Economic sustainability cannot be based on foreign aid, so it is critical for the Palestinian Authority (PA) to increase trade and spur private sector growth," he added.

The bank noted that Israeli restrictions remain the biggest impediment to investing, creating high uncertainty and risk.

Israel counters that it has eased travel and lifted restrictions, allowing the Palestinian economy necessary conditions to flourish, and that any constraints that remain are a result of vital security needs.

Earlier this year, an Israeli government report said the Palestinian Authority was not economically stable enough to sustain a state.

The International Monetary Fund last year said Palestinian financial institutions were ready for statehood.

Source: http://news.yahoo.com/correction-palestinians-economy-story-173854781--finance.html

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