(Agencies)
Updated: 2008-04-27 19:03

RAMALLAH, West Bank -- The Palestinian economy won't grow this year, largely due to Israeli restrictions on movement and despite billions of dollars in aid meant to shore up support for peace talks, the World Bank predicted Sunday.

An elderly Palestinian woman sits outside her house, as youths stand by in the West Bank refugee camp of Jalazoun near Ramallah, Thursday, April 17, 2008. Israel's joy over independence after two millennia of Jewish exile has been the Palestinians' catastrophe, or 'naqba,' the word they use to describe the uprooting of hundreds of thousands from their homes six decades ago. [Agencies]

The bleak prognosis stands in contrast to the bank's initial assessment that double-digit economic growth would be possible if Israel, the Palestinian government and the donors did their part.

The bank now estimates that the Gross Domestic Product — currently at about $4 billion — will grow by only 3 percent in 2008.

"That, taking into account population growth, leaves per capita income static, if not lower than the previous year," the report said.

The bank noted that the Gaza economy has sharply contracted because of the virtually complete closure of the Gaza strip by Israel and Egypt after the violent Hamas takeover there last year. In the West Bank, where Israel maintains a network of hundreds of checkpoints, gates and earthen barriers, GDP growth was only modest, the bank said.

In December, donor countries pledged $7.7 billion over three years to help fund a Palestinian reform and development plan.

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