The war in Gaza has resulted in an unprecedented level of
destruction to its economy which will take tens of billions of
dollars and decades to reverse, UN trade and development body
UNCTAD said in a new report on Wednesday.
The preliminary
assessment of the social and economic impacts of the
conflict examines Gross Domestic Product (GDP) loss, recovery
timelines and the enduring effects on poverty and household
expenditure.
It is estimated the annual GDP of Gaza declined by $655 million
last year, equivalent to 24 per cent.
"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 international community
needs to act now before it is too late," the report recommended.
Accelerated economic decline
Gaza has been under blockade since 2007, after Hamas seized
power, and had an average growth rate of 0.4 per cent through
2022.
“However, the military operation has greatly accelerated
the decline and precipitated a 24 per cent GDP contraction and a
26.1 per cent drop in GDP per capita for the entire year,” it
said.
The report found that if fighting were to stop immediately with
reconstruction starting right away, and the 2007-2022 growth
trend persists, it would take until 2092 just to
restore the GDP levels of 2022, with GDP per capita and
socioeconomic conditions declining.
“However, even with the most optimistic scenario that GDP could
grow at 10 per cent annually it would still take
Gaza’s GDP per capita until 2035 to pre-blockade level of
2006.”
Dire socioeconomic conditions
Conditions were already dire in the Gaza Strip, which is one of
the most densely populated places on the planet, with more than
two million Palestinians confined to 365 square kilometres, or
141 square miles.
The majority, 80 per cent, relied on international aid;
two-thirds of the population lived below the poverty line, and
unemployment stood at 45 per cent before the war. People
lacked adequate access to clean water, electricity and a proper
sewage system. Additionally, much of the damage from previous
Israeli military operations remained unrepaired.
Restoring pre-conflict socioeconomic conditions will take decades
and requires substantial foreign aid, UNCTAD said, noting that
the ongoing military operation has displaced 85 per cent of
Gaza's population. Economic activity has ground to a halt,
and poverty and unemployment have deepened.
Today, nearly 80 per cent of the labour force is unemployed,
while some 37,379 buildings — equivalent to 18 per cent of total
structures in Gaza — have been damaged or destroyed.
“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 said.
Break the cycle
The UN agency warned that a new phase of economic rehabilitation
cannot simply mean a return to the pre-conflict status
quo and “the vicious circle of destruction and partial
reconstruction” must be broken.
“Gaza’s economic constraints, rooted in 56 years of occupation
and a 17-year blockade, necessitate thorough
understanding and realistic strategies to unlock its growth
potential through measures that include restoring
the Gaza International Airport (today inoperable), building a
seaport and enabling the Palestinian government to develop the
natural gas fields discovered in the 1990s in the Mediterranean
Sea off the shore of Gaza to help finance the reconstruction of
infrastructure,” it said.
The report also emphasized the importance of providing immediate
support to the Palestinian government in efforts to prevent a
wider collapse, noting that foreign aid declined from a total of
$2 billion, or 27 per cent of GDP, in 2008, to $550 million in
2022, or less than three per cent of GDP.
UNCTAD further underscored that resolution of Gaza's crises
requires ending the military operation and the lifting of the
blockade, as pivotal steps toward realizing a two-State solution
between Israelis and Palestinians.
