Gaza's sole electricity plant is subject to closures through lack of fuel, impacting the economy (AFP)
The Gaza Strip's economy is in "free fall," a report from the World Bank warned on Tuesday, calling for urgent action by Israel and the international community to avoid "immediate collapse".
According to the report, Gaza's economy contracted by 6 percent in the first quarter of 2018. It said unemployment is now over 50 percent — and over 70 percent among Gaza's youth.
The World Bank calls upon Israel to lift restrictions on trade and movement of goods and people to help improve Gaza's economy, and urges development of "legitimate institutions to govern Gaza in a transparent and efficient manner".
The World Bank cited various factors, starting with Israel's 11-year-long blockade, for the precarious downturn. It also cited budget cuts by the rival Palestinian Authority and a reduction in international aid to the Palestinians, particularly from the United States.
Earlier this month, the United States announced it was cancelling all aid to the United Nations Relieft and Works Agency (UNRWA), which provides services to around five million Palestinian refugees.
Thousands of workers went on strike in the Gaza Strip on Monday to protest the cuts which have led to the dismissal of hundreds of its staff members in the besieged enclave.
Marina Wes, the World Bank's director for the region, said: "A combination of war, isolation, and internal rivalries has left Gaza in a crippling economic state and exacerbated the human distress."
The report was released ahead of a high level meeting of the bank's Ad Hoc Liaison Committee, responsible for coordinating development assistance to the Palestinians, on 27 September.
Wes said the increasingly dire economic situation in Gaza "has reached a critical point".
"Increased frustration is feeding into the increased tensions which have already started spilling over into unrest and set back the human development of the region's large youth population," she added.
In late March, Palestinians in Gaza launched the Great March of Return, gathering peacefully along the "buffer zone" in Gaza near the fence separating it from Israel.
The protest campaign calls for an end to Israel's blockade on Gaza and for Palestinian refugees' right of return to the lands that their families fled during the establishment of the state of Israel in 1948.
Israeli soldiers have killed at least 136 Palestinians during the weekly protests since March, including 27 minors, according to Gaza's Health Ministry. A Palestinian sniper also fatally shot an Israeli soldier.
Gaza's economic situation is likely to deteriorate further because of failed attempts to negotiate an easing of the blockade. Hamas leaders said this week that Egypt-mediated efforts to broker a long-term cease-fire with Israel have stalled.
Repeated attempts to broker a reconciliation deal between rival Palestinian factions — Hamas and President Mahmoud Abbas's Fatah party — have also failed.