UN Reports Devastating Gaza Economic Impact

A joint report by the United Nations, the European Union, and the World Bank estimates that the cost of rebuilding Gaza will exceed $50 billion. The damage to critical infrastructure alone is estimated at around $18.5 billion, a figure equivalent to 97% of the combined GDP of the West Bank and Gaza in 2022. Housing accounts for the majority of these costs, with an estimated 72% of the damage. The conflict has led to a catastrophic collapse of the Palestinian economy. In the fourth quarter of 2023, Gaza's GDP plummeted by over 80%, while the West Bank's economy contracted by 22%. The World Bank projects an overall real GDP decline of 26% for the Palestinian territories in 2024, with Gaza's economy shrinking by a staggering 86%. This economic downturn has wiped out years of development, with per capita income in the West Bank falling to 2008 levels. Unemployment has surged to unprecedented levels across the Palestinian territories. By March 2024, the unemployment rate had reached 57%, representing the loss of half a million jobs. In Gaza, the situation is particularly dire, with the International Labour Organization reporting an unemployment rate of 80%. The conflict has also severely impacted the West Bank, where unemployment more than doubled from pre-conflict levels. The poverty rate is projected to soar, potentially pushing over 1.8 million more people into poverty. The United Nations Development Programme warns that the conflict has set back human development in Gaza and the West Bank by 11 to 16 years. In Gaza, nearly the entire population is now living in poverty, a stark increase from 63.7% in 2023. The scale of destruction has left an estimated 26 to 47 million tons of debris and rubble, a cleanup operation that is expected to take years to complete. The private sector, a key driver of Gaza's economy, has seen 82% of its businesses damaged or destroyed. The agricultural sector has also been decimated, with damage to infrastructure like wells and solar panels hindering farming activities. The economic crisis extends to the public sector, with the Palestinian Authority facing a severe fiscal crisis. Increased deductions from clearance revenues by Israel and a decline in domestic revenues have forced the PA to reduce public salary payments. This has a ripple effect on the economy, as the public sector is the largest Palestinian employer, providing around 22% of all jobs. Neighboring countries have not been immune to the economic fallout. The conflict has led to a drop in tourism and increased tensions, impacting the economies of Egypt, Jordan, and Lebanon. A protracted conflict risks broader regional instability, which could further disrupt trade and energy markets. The long-term economic outlook remains bleak. Even with a ceasefire, the World Bank estimates it could take until 2038 for Gaza's GDP per capita to return to pre-crisis levels. The reconstruction effort will require a massive and sustained international effort, with the UN suggesting a cost that could reach up to $40 billion.