The territory's economy grew by 9.3 percent, with Gaza's increasing 15 percent and the West Bank's rising 7.6 percent, the U.N. Conference of Trade and Development said in a report.
The Palestinian per capita gross domestic product was 7 percent below the 1999 level, the report said.
The report noted Palestinian imports from Israel are not taxed but said much of these imports are produced elsewhere in the world and re-exported to the Palestinian territory, with import revenues going to the Israeli treasury.
A recent Bank of Israel study found about 58 percent of what's officially reported as Israeli exports to the territory comes to Israel from abroad. Thus, customs revenue doesn't go to the Palestinian Authority, costing it $480 million a year, or 25 percent of its public revenue, the report said.
Were that money available to the territory, the U.N. report said, its GDP could expand another 10 percent, or $500 million a year, and employment would grow 4 percent, adding 30,000 to 40,000 jobs a year.
The report found about 26 percent of Palestinians in the territory live in poverty, with rates as high as 38 percent in Gaza and at 18 percent in Gaza.