GAZA, March 15 (Reuters) - Economic decline in the Gaza Strip has become too steep to be tackled by international aid and also requires that the Israeli- and Egyptian-blockaded Palestinian enclave be allowed freer trade, the World Bank said on Thursday.
"The (Gaza) economy cannot survive without being connected to the outside world," it said in a 46-page report issued as world powers convened in Rome to discuss the future of a U.N. relief agency for Palestinians threatened by U.S. funding cuts.
"Any effort at economic recovery and development must address the impacts of the current closure regime."
Citing security, Israel and Egypt limit movement across Gaza's borders. The territory has been under Hamas control since 2007 but the Islamist group has been in Cairo-mediated talks on a power-share with the U.S.-backed Palestinian administration.
Gaza's economic growth plummeted from 8 percent in 2016 to 0.5 percent last year, with some half of the labour force unemployed and public health at risk from deteriorations in basic services like water and electricity, the World Bank said.
"In the long term, aid will not be able to provide the impetus for growth, nor can it reverse Gaza's de-development," it said, urging that Palestinian exports from the enclave be stepped up and restrictions relaxed on "dual-use" imports - a reference to materials that might have military applications.
Israel and Egypt did not immediately comment on the report, which came a day after they and 18 other countries held a Washington conference on potential remedies for Gaza's crisis.
The White House - which, like Israel, shuns Hamas and accuses the Palestinians of not pursuing peace sufficiently - said it presented "specific project ideas" that might be pursued at an international meeting on Gaza in Brussels on March 20.
(Writing by Dan Williams Editing by Mark Potter)
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