Palestinian women and school children participate a protest calling for an end to the Israeli blockade in front of the UNRWA headquarters in Gaza City, 27 Apr 2008

The World Bank says the Palestinian economy will likely remain stagnant in 2008, largely due to Israeli restrictions on Palestinian movement and trade.

In a report released Sunday, the bank says it expects the economy to shrink, despite serious Palestinian reform efforts, as well as billions of dollars in foreign aid.

In December, donor countries pledged nearly $8 billion ($7.7 billion) in aid to the Palestinians to fund a three-year development plan.

But the lending agency told donor nations in the report that per capita income in both the West Bank and Gaza Strip in 2008 will be static, if not lower.

The report says hundreds of Israeli checkpoints and roadblocks in the West Bank, as well as the virtual closure of the Gaza Strip following Hamas's violent takeover last year, have taken a huge toll.

The bank notes that modest GDP (Gross Domestic Product) growth in the West Bank, controlled by Western-backed President Mahmoud Abbas's government, was not enough to compensate for what it calls "severe contractions" in the Hamas-controlled Gazan economy.

Some information for this report was provided by AP and Reuters.