Evaluating the Effect of Covid-19 on the Palestinian Economy by Estimating the Relationship Between Economic Growth and Unemployment in Palestine

The Palestinian economy is a small and open economy that is characterized with a high level of uncertainty. The purpose of this paper is to determine the effect of COVID-19 on the economic growth in Palestine through estimating the relationship between economic growth and unemployment. We will use the GDP per capita to measure economic growth and unemployment rate in Palestine. Thus we will also look at the Palestinian labor force and determine whether the job creation is successful in absorbing the rising rates of unemployment and determine how COVID-19 will affect unemployment rates. This is an effort to study where the Palestinian economy is heading and gives suggestions of how we can avoid the convergence into a Volatility Uncertainty Complexity Ambiguity environment. The data was taken from the Palestinian Central Bureau of Statistics for the period from 1995 to 2018. The time series analysis indicated that a 1 percent increase in the unemployment rate will result in a 0.356 percent decrease in the GDP per capita. Given the continuation of the Israeli occupation, the Palestinian government plays the role of “crisis management”.