Geneva: Palestinian citizens are trapped in an economy of jobless growth with no prospects, especially in Gaza, which is undergoing “de-development”, the United Nations trade and development agency UNCTAD said in an annual report published on Wednesday.

It said unemployment in the Occupied Territories was the highest in the world in 2017 at 27.4 per cent, while agricultural production fell by 11 per cent. Half of Palestinians under 30 were unemployed. The economy grew 3.1 per cent but was flat on a per capita basis.

Every year the situation becomes more and more unacceptable and difficult” UNCTAD Deputy Secretary-General Isabelle Durant told a news conference in Geneva, describing the economic situation as “absolutely unsustainable”.

A customs union between the Israel regime and the Occupied Territories has isolated the Palestinian economy from the rest of the world and left it dependent on the occupation regime, the report said.

The major reason for this dire situation from the economic development point of view is a set of Israeli restrictions,” Mahmoud Al Khafif, coordinator of the report, said.

“These measures include permit systems for Palestinians to work in Israel; you have roadblocks in the West Bank, you have earth mounds, trenches, road check-points, gates and separation walls.”

In Gaza, where real incomes have fallen 30 per cent since 1999 and production capacity has been hit by successive regime military operations, households got an average of two hours of electricity per day, and only about 10 per cent had access to drinking water.

“It is de-development, it is not development,” Al Khafif said.

Hamas seized control of the territory in 2007 following a brief civil war with forces loyal to Mahmoud Abbas, the Western-backed Palestinian president based in occupied West Bank.

Israel maintains tight control of its land and sea borders. Egypt also restricts movement in and out of Gaza on its border.

Abbas’s Palestinian National Authority has also sought to use financial measures to isolate Hamas, last year slashing the salaries of thousands of government workers in Gaza by 30 per cent.

Total international support dropped significantly from $2 billion (Dh7.35 billion) in 2008 to $720 million in 2017.

A further blow came this month when US President Donald Trump halted funding for the UN Palestinian refugee agency UNRWA, leaving a $200 million gap.

Durant said it was too early to assess the impact of the US move, and she hoped European or other donors might at least partially make up the shortfall.