UN says Palestinian economy shrank ‘unprecedented’ 4% in month of war
Syrian economy used to lose 1% of its GDP per month at height of conflict, and it took Ukraine a year and a half to lose 30% of its GDP, report says
A UN report painted a stark picture of the Palestinian economy on Friday after a month of war and a near-total siege of the Gaza Strip.
The gross domestic product shrank 4 percent in the West Bank and Gaza in the war’s first month, sending over 400,000 people into poverty, the UN said.
On October 7, Hamas started the war when some 3,000 terrorists launched a deadly assault on southern Israel, killing some 1,400 people, mainly civilians, and kidnapping some 240 others.
More than two-thirds of Gaza’s population of 2.3 million have since fled their homes, as Israel launched weeks of intense airstrikes followed by an ongoing ground operation, vowing to obliterate Hamas.
The rapid assessment of the economic consequences of the Gaza war released by the UN Development Program and the UN Economic and Social Commission for West Asia was the first UN report showing the impact of the conflict.
If the war continues for a second month, the UN has projected that the Palestinian GDP, which was $20.4 billion before the war began, will drop by 8.4% — a loss of $1.7 billion. And if the conflict lasts a third month, Palestinian GDP will drop by 12%, with losses of $2.5 billion and more than 660,000 people pushed into poverty, it projected.
UN Development Program Assistant Secretary-General Abdallah Al Dardari told a news conference that a 12% GDP loss at the end of the year would be “massive and unprecedented.”
By comparison, he said, the Syrian economy used to lose 1% of its GDP per month at the height of that country’s conflict, and it took Ukraine a year and a half of fighting to lose 30% of its GDP, an average of about 1.6% a month.
At the beginning of 2023, the Palestinian territories – the West Bank and Gaza – were considered a lower middle-income economy with a poverty level of $6 per day per person, Economic Commission Executive Secretary Rola Dashti said.
In January, Gaza was already grappling with high unemployment of about 46%, three-and-a-half times higher than the West Bank’s 13%, the report said.
But just weeks of war has destroyed hundreds of thousands of jobs.
“As the war hits the one-month mark, 61% of employment in Gaza, equivalent to 182,000 jobs, is estimated to have been lost,” it said. “Around 24% of employment in the West Bank has also been lost, equivalent to 208,000 jobs.”
Prior to the Hamas onslaught, some 20,000 Gazans had permits to work inside Israel. During the Bennett-Lapid government, this number rose from 5,000 to 10,000, and it doubled once more since Prime Minister Benjamin Netanyahu returned to office in January of this year.
Al Dardari pointed to a massive disruption in the West Bank economy, which is responsible for 82% of Palestinian GDP, explaining that this is supposed to be the season for olive and citrus farmers to collect their products but they can’t because of the war. And “the tourism season is practically gone – and agriculture and tourism represent 40% of the GDP in the West Bank,” he said.
In addition, Al Dardari said, there are major disruptions to trade, to the transfer of money from Israel to the Palestinian Authority, which controls the West Bank, and no investment.
The Economic Commission’s Dashti said “The level of destruction is unimaginable and unprecedented” in Gaza.
“As of November 3, it is estimated that 35,000 housing units have been demolished and about 220,000 units are partially damaged,” she said. The report said at least 45% of Gaza’s housing units have been destroyed or damaged.
If this persists, the majority of Gazans will have no homes and Al Dardari said even if fighting ended now there would be massive long-term displacement, “with all its humanitarian economic development and security consequences.
“All of that growth and development is going to regress between 11, 16, or even 19 years if the fighting continues,” he added. “We will go back to 2002.”
