The Israel-Hamas war in Gaza has caused an “unprecedented level of destruction,” which will take tens of billions of dollars and decades to recover, as per a new analysis released by the UN trade and development authority (UNCTAD).
The preliminary assessment by UNCTAD evaluates the impact of Israel’s military operation on Gaza based on four important factors: GDP loss, recovery time horizon, direct impact on economic activities owing to destruction, and medium-term effects on poverty and household expenditures.
Gaza’s Economy
According to the report, it is estimated that Gaza’s annual GDP declined by $655 million (in constant 2015 dollars) in 2023, accounting for 24% of GDP. By the end of the third quarter of 2023, Gaza’s unemployment rate was 45.1%, it added.
“However, the military operation has greatly accelerated the decline and precipitated a 24% GDP contraction and a 26.1% drop in GDP per capita for the entire year,” the report noted.
The International Labour Organisation (ILO) reported that 61% of employment has been lost compared to pre-conflict levels, accounting for 182,000 jobs. By December 2023, unemployment in the Strip had reached 79.3%.
The report indicates that if the fighting stops immediately and reconstruction begins right away, assuming that “GDP growth picks up 10% on average annually, with an annual population growth of 2.8 per cent, the GDP per capita of Gaza will return to its 2022 level by 2028 and to its 2006 levels in 2035.”
However, if the 2007-2022 growth trajectory continues at an annual growth rate of 0.4%, “it will take Gaza 70 years just to restore the GDP levels of 2022, with GDP per capita continuously and precipitously declining given the population growth rate.”
Deteriorating Socio-Economic Conditions
Restoring pre-conflict socioeconomic conditions would take decades and will require substantial foreign assistance, UNCTAD said, noting that the ongoing military attack has displaced 85% of Gaza’s population. Economic activity has come to a halt, and poverty and unemployment have increased. Per the report, “Living conditions in Gaza are at their lowest since occupation began in 1967 and will worsen even more unless the military operation stops.”
#Gaza: Unprecedented level of destruction will take tens of billions of dollars and decades to reverse.
— UNCTAD, the UN trade & development body (@UNCTAD) January 31, 2024
Even with the end of the military operation and the recent average growth rate of 0.4%, it would take Gaza until 2092 just to restore 2022 GDP levels. https://t.co/SRQTlFlkgy pic.twitter.com/mTAkS5Bscy
The UN Satellite Center (UNOSAT) published three damage evaluations for the periods of 7-15 October, 7 October-7 November, and 7 October-26 November 2023. UNOSAT data reveal a significant increase in damage intensity: By 15 October, 10,548 buildings had been damaged; by 7 November, the figure had risen to 25,050; and by 26 November, it had reached 37,379 buildings, accounting for 18% of the Strip’s total structures.
UNCTAD predicted that, by 2026, expenditure per adult equivalent would have been 17.6%, 24.5%, or 37.1% lower than the pre-crisis level if Israel’s military operation had ended by 15 October, 7 November, or 26 November, respectively.
“By the same reasoning, UNCTAD estimates that, by 2026, poverty rates would be 17.8%, 24.8% and 37.7 % higher had the military operation been concluded by the aforementioned dates. The longer the operation persists, the greater the impact will be,” the report stated.
“The Gaza Strip, half of whose population are children, is now rendered almost uninhabitable with people lacking adequate sources of income, access to water, sanitation, health or education,” UNCTAD stressed.
UN Recommendations
“If Gaza is to remerge with a viable economy, the military confrontation should end immediately, and reconstruction should begin in earnest and without delay,” the report said.
It suggested that the international community must respond immediately; a long-term ceasefire is required to allow adequate aid into Gaza; and reconstruction and recovery must begin immediately to get Gaza back on track for long-term growth.
The actions of the Israeli government, donors, and the international community will all have a significant impact on the Palestinians. “Only by ending the military confrontation and fully lifting the blockade of Gaza can there be hope to sustainably resolve the political, socioeconomic and humanitarian crisis engulfing Gaza,” the report added.
While there is an urgent need to provide humanitarian relief and repair Gaza’s damaged infrastructure, the report highlights the significance of giving immediate, mentioning that robust budget support to the Palestinian government cannot be overstated. The level of budget support should be sufficient to ensure that the Palestinian government avoids collapse and the spread of large-scale chaos.
In its concluding remarks, the report added that “more serious efforts will be needed to achieve the reunification of Gaza with the occupied West Bank; politically, administratively, fiscally, economically and socially under a single national government.” “The vicious circle of destruction and partial reconstruction needs to be broken by negotiating a peaceful solution, based on international law and relevant UN and Security Council resolutions.”
The situation in Gaza has gone from catastrophic to near collapse.
— UNICEF (@UNICEF) February 3, 2024
Children need a humanitarian ceasefire. Now. pic.twitter.com/mzokAVgCk0
Situation in Gaza
By 28 January 2024, more than three months into Israel’s war with Hamas, the recorded death toll in Gaza had risen to 26,422, with children and women accounting for the majority. At least 65,087 people have been injured, and many more are reported missing, most likely trapped or killed beneath the rubble.
Further, an estimated 1.9 million people, or roughly 85% of Gaza’s population, have been internally displaced as a result of evacuation orders issued by the Israeli government. Reportedly, nearly 1.72 million of these internally displaced people were registered in severely overcrowded UNRWA facilities, while the rest sought refuge in schools, hospitals, wedding halls, offices, and community centres, with some camping in open space near shelters.
Meanwhile, in the West Bank, 362 Palestinians have been killed and 4,366 injured, including in East Jerusalem, as of 28 January 2024. Last year, 507 Palestinians were killed in the West Bank, including East Jerusalem — the highest number since the UN Office for the Coordination of Humanitarian Affairs (OCHA) began recording casualties in 2005.