formed War Strong economic impacts. The Palestinian economy, which already suffers from a long-term siege and a lack of resources, has found itself facing Humanitarian catastrophe And new economic. Infrastructure The already fragile area was subjected to further destruction, which increased the rates Unemployment And povertyand disrupted basic economic activities.
This conflict resulted in the widespread destruction of industrial and commercial facilities, which undermined… Production capacity for the private sector and led to a sharp decline in Government revenues.
exposure Palestinian economy Generally, there are devastating effects as a result of the ongoing war in Gaza. Reports indicate that damage to critical infrastructure, such as networks electricity Water and sanitation facilities are estimated at billions of dollars, with the war causing a sharp decline in the gross domestic product, as vital sectors such as Agriculture The industry was hit hard, leading to higher rates Unemployment To unprecedented levels.
In this context, the latest World Bank report – issued before the end of last month – reflects some of the economic repercussions of the war in Gaza on the Palestinian economy, especially in the Gaza Strip, as follows:
- All residents of the Gaza Strip suffer from poverty.
- Inflation It exceeded 250 percent, due to the repercussions of the ongoing war on the Gaza Strip for about a year (which caused the displacement of about two million people).
- A 35 percent decrease in real GDP in the Palestinian territories in the first quarter of 2024, which is “the largest ever.”
- 86 percent contraction in the Gaza economy during the first quarter… while it contracted Economy of the West Bank By 25 percent.
- The unemployment rate in the Palestinian territories reached record levels and exceeded 50 percent.
It is noteworthy that the humanitarian situation has greatly worsened due to the displacement of approximately 1.9 million people, with shelters full and insufficient services. SanitationIt also led to a severe shortage Food Water, fuel and medical equipment are in widespread shortage Food securityand famine-like conditions, according to the World Bank.
Devastating repercussions
In a special statement to the “Eqtisad Sky News Arabia” website, Professor of Political Science at Al-Quds University, Dr. Ayman Al-Raqab, explained that Palestinian economy It has been greatly affected with the passage of a year since the war, and the negative repercussions continue on various aspects of the economy. He pointed out that one of the most prominent reasons for this deterioration is that the Palestinian economy relies heavily on Palestinian labor revenues, as many Palestinians work in Israeli cities, especially in The West Bank, but with the outbreak of war this employment stopped completely, which negatively affected the Palestinian economy as one of its most important sources.
Al-Raqab added that the paralysis of the agricultural sector in the West Bank was one of the main factors behind the deterioration of economic conditions, in addition to the complete destruction of factories in Gaza, which directly affected a large segment of citizens who work in these factories. He explained that there is another factor that severely affected the Palestinian economy, which is Israel’s piracy of the Palestinian Authority’s funds, which affected the Authority’s ability to pay employee salaries and disrupted all aspects of economic life.
He pointed out that the cost of war is on Palestinian economy A year later, it was very large and burdened the general budget, indicating that the private sector, which had a budget exceeding the size of the state budget, was in turn subjected to a severe blow that made the ability to achieve any economic growth almost impossible. He added that the cessation of local and international investments and the destruction of vital infrastructure made the reconstruction of the Palestinian economy a challenge that requires significant financial support and urgent reform programs, especially in light of the absence of sufficient international support so far.
According to the United Nations Satellite Center UNOSA, about 66 percent of the buildings in the Gaza Strip have been “damaged” since October 2023, with 163.8 thousand damaged buildings, including: more than 52 thousand buildings that were completely destroyed, and 19 thousand buildings that were severely damaged, 56.7 thousand buildings were moderately damaged, and 35.5 thousand buildings were damaged in some way. Gaza City is the most affected, with 63.6 thousand buildings.
And I reached Losses The amount that the Gaza Strip has been exposed to since the beginning of the war amounts to about 33 billion dollars, which is twice the size of the Palestinian economy. As for the cost of reconstruction, it is expected to reach 40 billion dollars, according to the United Nations, and to take 80 years.
A report issued by the United Nations Conference on Trade and Development (UNCTAD), mid-last month, said that Gaza’s economy has shrunk to less than one-sixth of its size since the outbreak of escalation.
Various factors
For his part, Professor of Modern Hebrew and member of the Egyptian Council for Foreign Affairs, Dr. Ahmed Fouad Anwar, stated in exclusive statements to the “Eqtisad Sky News Arabia” website that the Palestinian economy has been greatly affected due to several factors; Most notable is the absence of financial dues from the Palestinian government (from clearance funds), as this money was collected by Israel and then transferred to Palestine, but this system stopped completely with the start of the war.
He added that among other negative reasons is the impact of the state of complete paralysis in the sector Employment At the level Palestinewhich led to huge losses in various sectors. The ongoing displacement and loss of vital centers due to the year-long war also contributed to the worsening of the economic situation.
He stressed the need for donor countries to urgently provide various services to the Palestinian economy, given the great extent of suffering faced by the Palestinian people, which threatens people’s ability to continue their daily lives. He called for the necessity of providing financial support and strengthening relief and development programs to ensure the continuity of basic services and limit the repercussions of the ongoing war, in light of the difficult economic conditions that Palestine is suffering from.”
The “Palestinian Economic Update” report issued by the World Bank in late September indicated that the Palestinian Authority’s financing gap has expanded, which is expected to reach $2 billion in 2024 (i.e. three times the gap in 2023), which poses serious risks. On the provision of services and may lead to a systemic collapse.”
- The cessation of commercial operations in Gaza has left families without income, while the prices of basic goods have risen dramatically.
- The educational system has collapsed in Gaza. The health system has also been greatly damaged, as 80 percent of primary care centers are no longer functioning, according to the World Bank.
- The conflict has led to severe cash shortages in Gaza, affecting access to humanitarian aid and basic financial services.
Limited resources
In a special statement to the “Eqtisad Sky News Arabia” website, the writer and analyst specializing in Palestinian affairs, Ashraf Abu Al-Houl, confirmed that the Palestinian economy has been greatly affected as a result of the current situation, as this economy, by its nature, suffers from poverty and relies on limited sources that are mostly limited to Foreign aid and taxes collected by Israel are then transferred to Palestine.
Abu Al-Houl added that the investment channels available to the Palestinian economy are minimal, as it depends mainly on agricultural activity and remittances from Palestinians working abroad, in addition to Palestinian labor in Israel in the West Bank and Gaza.
He pointed out that the war on Gaza and the West Bank led to the widespread destruction of agricultural lands and factories, causing a major cessation of money transfers. The Israeli seizure of a large portion of taxes and customs had a profound negative impact on Palestinian economic conditions.
He explained that these repercussions led to an increase in unemployment rates and the collapse of many economic sectors, considering that the only thing that contributes to keeping citizens alive in Gaza is the aid of international bodies, which remains an essential pillar of support for the Palestinians in facing the harsh conditions, while the people of the West Bank face similar challenges. In the absence of job opportunities and sustainable resources.
