The factors that led to the popular upheaval in Tunisia set off alarm bells throughout the Arab world, and the Palestinian Authority was no different.

Palestinian Authority Prime Minister Salam Fayyad spent more than two hours on Sunday talking to 40 Palestinian journalists at his Ramallah office about the economic situation and living conditions in the West Bank and Gaza Strip.

The message he wanted to send to 2.5 million Palestinians in the West Bank and Gaza Strip was that economic conditions were good in spite of reports on the rise in consumer prices and relatively high unemployment and poverty figures.

The Palestinian Central Bureau of Statistics said in a recent report that the consumer price index for 2010 increased by 3.75% compared with the previous year.

The economic situation and the standard of living in the Palestinian areas are a constant concern of the Palestinian Authority, Fayyad said.

Although prices of basic goods have increased, Fayyad said, per-capita income also has increased.

Fayyad, a former World Bank official with a PhD in economics from the University of Texas at Austin, used figures to explain how the Palestinian economy had managed to survive and grow in spite of the fact that the Palestinian territories were still under Israeli occupation and split between the West Bank and Gaza Strip since 2007.

The cumulative cost-of-living increase between 2001 and 2010 was more than 40%, he said. At the same time, cumulative average income also increased by 55%.

The Palestinian economy, after few good years in the late 1990s, declined sharply following the outbreak of the second intifada (uprising) against Israel in the West Bank and Gaza Strip late in 2000. When Fayyad was asked to form a government in June 2007 following the split between the West Bank and Gaza Strip, he had inherited a torn-down economy.

Since then, Fayyad said he had worked to rebuild what was destroyed in the previous years and succeeded, with the recognition of donors and the World Bank, in bringing the economy out of its slump and back to where it was in 2000.

“Going back to the level of where we were in 2000 is not a reward,” Fayyad said. “But we have been able to at least stop the decline.”

The unemployment rate has declined, Fayyad said, though it is still relatively high. There are still 106,000 unemployed people in the West Bank and 112,000 unemployed in the Gaza Strip. The Palestinian Authority employs more than 150,000 people, but about a million work in the private sector or in civil society organizations.

He said that if he were able to start major projects in areas of the West Bank that are still under full Israeli control, referred to as Area C, which makes up about 60% of the area of the West Bank, many more jobs would be created. But he said the occupation impedes economic growth.

The number of people on welfare has increased from 65,000 to 95,000, Fayyad said, adding that the Palestinian Authority is responsible for providing a decent living for these people.

Fayyad said his government was in talks with trade unions, asking what his government could do to make things better.