"The finances of the 25-mile long besieged strip were “collapsing”, liquidity had dried up, and plunging aid flows were no longer able to stimulate growth", says the devastating report, released on Tuesday. 

The Palestinian territory’s economy has consequently shrunk by 6 per cent in the first quarter of the year "with indications of further deterioration since then", it said.

Every second person in Gaza’s 1.8 million-strong population is now living in poverty. Youth unemployment, meanwhile, had soared to over 70 per cent. 

Marina Wes, World Bank director for Gaza and the West Bank, called for “urgent, real and sustainable solutions to the crisis” warning it was impacting the security situation in the region.

“The economic and social situation in Gaza has been declining for over a decade but has deteriorated exponentially in recent months and has reached a critical point,”  Ms Wes said.

The World Bank said the core of the problem was Israel’s decade-long blockade on the strip. It urged Israel to lift restrictions on trade, allow the movement of goods and people, and to extend highly restricted fishing zones to 20-miles  - as agreed in the 1990s.

But the report said the situation was recently compounded by a controversial decision by the West Bank-based Palestinian Authority to slash $30m a month of funding to Gaza.

In total, the World Bank projected the financing gap to be as large as $600m a year, which can not be plugged by the PA, which was facing its own economic troubles.

At least 187 Palestinians have been killed by Israeli fire since 30 March, when the border fence protests first erupted. A 21-year-old was shot dead on Monday night. One Israeli soldier has been killed in that time.

Israel has defended its actions, saying the protesters were attacking the border and launching incendiary balloons and kites into Israeli lands.

The Independent

More about: Gaza