This report highlights the stalling of the Palestinian economy and calls for a review of the Israeli application of the dual use goods system. The main body of the report is organized in two chapters and two supporting annexes. Chapter I focuses on recent economic developments in the real, fiscal and banking sectors, while providing a near term outlook that highlights critical challenges facing the Palestinian economy. Chapter II looks at the impact of dual use restrictions on specific sectors in both the West Bank and Gazan economies and makes short and long run recommendations that would allow more activity and job creation.