Bank Association Report.. A Look at Crisis Management Scenarios and Fragile Recovery 2026

Follow-up from SadaNews: The reports issued by the Bank Association in Palestine serve as a strategic reference for understanding the delicate balances governing the financial and national scene. In a new report published in issue (101) of "Banks in Palestine" magazine, the Association focuses on the pulse of an economy facing unprecedented complex pressures. This report goes beyond merely presenting figures, offering a deep analysis of the state of "chronic crisis management" that the Palestinian economic system endures under the weight of blockade and political restrictions.

The report compiles insights from a select group of experts and analysts who reviewed the axes of growth, public finance, the banking sector, and the labor market, presenting scenarios ranging from precarious stability to collapse risks, while emphasizing that the Palestinian economic structure, despite its small size, remains hostage to the dismantling of Israeli restrictions and effective international interventions.

Growth Approaching Zero and Cautious Management of Complex Crises

Economic expert Dr. Saeed Sabri sees that 2026 will be the year of "risk management" par excellence, as economic growth is likely to remain stagnant near zero, with serious prospects of contraction if the current pace of restrictions continues and reconstruction efforts in Gaza falter.

Sabri clarifies that public finance remains the weakest link due to the ongoing clearance crisis and its use as a political pressure tool, which has widened the deficit gap and reduced external aid. Regarding the banking sector, Sabri describes it as precarious stability, where banks manage risks and accumulate public debt and surplus shekels but remain unable to play an expansive developmental role under these circumstances.

Sabri concludes that any real improvement remains conditional on major political and structural changes, making current economic policy limited to "putting out fires" rather than mapping out sustainable growth pathways.

Absence of Fundamental Change Amid Occupation Escalation

For his part, economic expert Muayid Afana anticipates that the current scene will continue without radical transformations, due to the persistence of the causes of the crisis, foremost among them the suffocating blockade and the fragmentation of the West Bank.

Afana clearly points out that the year 2026 has a special character as it is an election year in Israel, which may push extremist parties to tighten punitive measures against Palestinians to gain electoral advantages. Regarding external support, Afana confirms that international grants remain limited compared to the size of actual needs and the accumulated debts and arrears, which exceeded $14.6 billion by the end of 2025, a staggering figure exceeding the GDP of Palestinians.

He believes that any potential partial breakthrough will be linked to American pressures to move the political track and release the withheld clearance funds, a scenario that remains unlikely under the current circumstances.

Cumulative Economy and Trade Balance Challenges

Researcher at the Palestinian Economic Policy Research Institute "MAS" Maseef Maseef reviews the profound and destructive impacts of wars and Israeli policies, noting that the Palestinian economy has been suffering from a cumulative crisis that has extended for three consecutive years, leading to a sharp decline in all indicators.

Maseef explains that productive and service sectors have significantly declined, causing the economic triangle (employment, public finance, private sector) to operate at half its capacity or less. He also highlights the chronic deficit in the trade balance, where imports exceed the value of exports by three times, coinciding with decreased purchasing power and increasing unemployment rates to record levels. Nevertheless, Maseef offers a glimmer of hope regarding the resilience and small size of the Palestinian economy, emphasizing that the regular payment of salaries or the return of workers could quickly stimulate the economic wheel by 25%, potentially leading to growth ranging between 3% and 5% if some outstanding issues are addressed.

Banking Threats and Decoupling Implications

Economic expert Hani Najm addresses the risks of severing banking relations between Israel and the Palestinian side, asserting that this threat represents an existential risk to the Palestinian economy, but at the same time, it will leave tangible negative effects on the Israeli economy, especially in the construction and agriculture sectors.

Najm clarifies that preventing Palestinian workers from working reduces cash liquidity in the local market, leading to increased commodity prices and mounting burdens on citizens.

He warns that ongoing economic pressures may lead to an overall explosion, indicating that the strategic solution for Palestinians in the event of this severance being implemented in a "stubborn" manner may involve seeking to decouple from the shekel and arranging new economic and banking relations with the Arab world to attract investments, thereby ending the situation of forced dependency on the Israeli economy.