2025: The Year of Preventing Collapse.. 2026: The Year of Economic Decisions That Cannot Be Delayed

As we reach the end of 2025, the most honest economic question is not: What have we achieved? But: How did we avoid collapse? The Palestinian economy did not move this year along a trajectory of natural growth that can be measured by investment or employment indicators; rather, it moved within a narrow margin between continuation and regression. It was a harsh year for families, exhausting for institutions, and clearly revealing the limits of the existing economic model, and the cost of postponing deep reforms that have been deferred year after year.

Economically, it can be said that the most significant achievement in 2025 was preventing collapse. This is a realistic description that carries no exaggeration. The resilience of the banking system despite the liquidity and currency crisis, and the continued payment of salaries - although insufficient - maintained the minimum of economic activity and prevented its complete halt. Salaries still constitute more than a third of public expenditure, and tens of thousands of families rely on them as a primary source of income, making any disruption in this area a direct threat to social stability, not just a financial or accounting issue.

At the same time, the private sector continued to operate under extremely difficult conditions. Weak demand, rising costs, and diminished economic certainty have severely pressured small and medium-sized businesses, yet this sector maintained a minimum level of operation, contributing to keeping the markets alive, albeit slowly. Furthermore, the discussion around digitization, electronic payment, and cash management has moved from a narrow technical framework to the public sphere, reflecting an increasing awareness of the structural crisis facing the Palestinian economy, and the need for solutions that go beyond temporary fixes.

However, understanding the scene would not be complete without noting one of the most dangerous transformations during 2025, which is the decline of Palestinian workers’ employment within the Green Line. For many years, this work has been a fundamental lever for income and liquidity, and an unannounced pillar of economic stability. Tens of thousands of families relied directly or indirectly on this income, which fueled consumption, supported local markets, and eased pressure on public finances.

But increasing restrictions, reduced permits, and a rising level of uncertainty have led to a large number of workers exiting this market or decreasing their working days and incomes. This was not merely a labor crisis, but a wide income shock that immediately reflected on the local economy, from a decline in consumption to weakened liquidity, leading to increased pressure on families, banks, and public finances.

According to estimates from trade union bodies and international reports, the cumulative losses in the incomes of Palestinian workers and the local economy due to restrictions on access to the Israeli labor market range between 8 and 10 billion dollars, equivalent to approximately 28 to 35 billion shekels based on current exchange rates. These figures not only represent lost wages but also liquidity that has vanished from the markets, a diminished purchasing power, and multiplying effects on the economy as a whole.

Most dangerously, this loss was neither temporary nor marginal; rather, it represented a continuous drain on one of the most important sources of external income for the Palestinian economy, once again revealing the fragility of a model that relies on an unstable external labor market, completely subject to political and security decisions beyond Palestinian control.

Despite this fragile resilience, 2025 was also a year for entrenching crisis management policies instead of addressing them. We did not witness any radical reform of public finances, nor clear restructuring of the wage system, nor a real transition toward a productive economy that reduces excessive reliance on offsets and bank borrowing. Solutions remained temporary, and costs continued to accumulate, while the banking system was burdened with roles that exceeded its natural function, leaving citizens with eroded incomes and rising living costs.

Hence, 2026 does not come as a comfortable extension, but as a true moment of decision. A year that will not tolerate reassuring discourse unsupported by action, or gray solutions that postpone an explosion rather than addressing it. What is needed first is a redefinition of the government's role in the economy, gradually shifting from the role of the largest employer and consumer to the role of an intelligent regulator, which creates a productive environment, stimulates investment, and grants the private sector a true space for growth.

Moreover, 2026 requires addressing the shock of workers inside the Green Line within a comprehensive vision, not through partial or temporary solutions. Active policies are needed to create local alternatives and absorb labor in productive sectors capable of generating real income, instead of leaving tens of thousands in the circles of unemployment or low-wage fragile work.

As for digitization, it is a necessity, not an option, but only if it serves as a tool for reform rather than a tool of pressure. The shift towards electronic payments and cash management must be gradual, protecting vulnerable groups, and building trust with citizens, rather than imposing facts on them. Success in this path is not measured by technology alone, but by its ability to enhance both justice and efficiency together.

In the end, responsibility cannot be narrowed down to one party. The government, the monetary authority, banks, the private sector, and citizens all play a part in the equation. What is required in 2026 is an earnest economic discourse that lays the facts on the table without exaggeration or simplification, recognizing the constraints without surrendering.

2025 taught us that resilience is possible, but it is costly and painful. As for 2026, it will determine whether we are capable of transitioning from crisis management to reforming it. What we need is not a larger economy, but a more honest economy with itself, more just to its people, and bolder in its decisions.