World Bulletin/News Desk

Israel's system of checkpoints and restrictions in the occupied West Bank inflicts long-term damage on Palestinians' ability to compete in the global market, the World Bank said on Tuesday.

The policies are causing a contraction in manufacturing and agricultural sectors, "alarmingly" high unemployment and social problems that would outlive any Israeli-Palestinian peace agreement, the organization said in its report.

Almost a quarter of Palestinians in Gaza and the West Bank are unemployed, contributing to shrinking productive sectors.

"The share of exports in the Palestinian economy has...been in steady decline since 1994, dropping to 7 percent in 2011, one of the lowest rates in the world," said the World Bank.

"The longer the current, restrictive situation persists, the more costly and time-consuming it will be to restore the productive capacity of the Palestinian economy," it said.

Palestinian hopes to build economic institutions capable of sustaining a hoped-for state have withered as the curbs persist.

Real GDP growth has slumped from a high of 11 percent in 2010 and 2011 to 6.1 percent in the first three quarters of 2012, according to the Palestinian Central Bureau of Statistics.

The Palestinian economy is bound closely to Israel's through infrastructure and trade and has few foreign trading partners.

In 2011, Israel received 86 percent of Palestinian exports and provided 73 percent of its imports, a situation the World Bank called "atypical."