The International Monetary Fund said on Thursday that success in Middle East peace talks could boost Palestinian economic growth while failure could cause increased debt.
"A breakthrough in the peace talks could launch major donor initiatives... which could boost average annual real GDP growth to about 6.5 percent in 2014-19," said an IMF report on a January 28-February 6 visit by its officials to the West Bank and the Gaza Strip.
"On the other hand, failure of the peace negotiations could trigger a political and security crisis that would lead to accelerated arrears accumulation and economic contraction," it said.
US Secretary of State John Kerry coaxed Israel and the Palestinians to the negotiating table in late July 2013 for a scheduled nine months of direct talks which will end in April.
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So far, however, there has been very little visible progress.
The IMF said that if talks continue inconclusively it foresees growth in Palestinian Gross Domestic Product of about 2.5 percent in 2014.
It said that last year, GDP in the Palestinian territories grew by 1.5 percent, "reflecting the impact of uncertainty regarding the Israeli-Palestinian peace process and a sharp deterioration of economic conditions in Gaza".
It was well below a September 2013 IMF forecast of 4.5 percent.
The IMF September report said the West Bank and Gaza Strip's economic prospects were "dim under (the) status quo," and said Israeli restrictions on Palestinian movement and trade must be eased in order for matters to improve.