Gaza’s economy has been left in “utter ruin” by the year-long war between Israel and Hamas, and it would take 350 years to return to its pre-conflict levels, the United Nations has warned.
In a report on the economic costs of the war prepared by its trade and development wing (Unctad), the UN said the fighting since Hamas killed more than 1,000 Israelis on 7 October last year had devastated the remnants of Gaza’s economy and infrastructure.
The report, presented to last month’s UN general assembly, said economic activity across Gaza – which had been weak before the war – had ground to a halt, apart from minimum humanitarian health and food services provided under conditions of severe water, fuel and electricity shortages, and significant access constraints.
Construction output was down by 96%, agriculture output by 93%, manufacturing by 92% and services sector output by 76%. Meanwhile, unemployment reached 81.7% in the first quarter of 2024, a rate the UN said was likely to worsen or persist for as long as the military operation continued.
“The intense military operations in Gaza resulted in an unprecedented humanitarian, environmental and social catastrophe and propelled Gaza from de-development to utter ruin,” the report said.
“The far-reaching repercussions will linger for years to come, and it may take decades to return Gaza to the status quo ante.
“Once a ceasefire is reached, a return to the 2007–2022 growth trend would imply that it would take Gaza 350 years just to restore GDP to its level in 2022.”
The report said the past 12 months of military action had followed a period between 2007 and 2022 when the economy of Gaza had been severely affected by restrictions imposed by Israel on the movement of goods and people.
The UN said the income loss caused by the restrictions and military operations was “staggering”.
“According to thorough estimations described in the present report, in the absence of those constraints, by the end of 2023 it is estimated that Gaza’s gross domestic product (GDP) would have been, on average, 77.6% higher than its actual level.
“This implies a conservatively estimated cumulative loss of $35.8bn of unrealised GDP potential during the period 2007–2023 – equivalent to 17 times the GDP of Gaza in 2023.”
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In the first three-quarters of 2023 – before the war began – the Gazan economy was contracting at an annual rate of about 3%. It contracted by 22.6% in 2023 as a whole, with 90% of that drop coming in the fourth quarter.
The report said that, by the end of July 2024, 88% of school buildings had suffered some damage, 21 out of 36 hospitals were out of service and 45 out of 105 primary health facilities were non-operational. More than 62% of residential buildings were damaged or destroyed, and more than 59% of the water, sanitation and hygiene sector infrastructure was heavily damaged, with an impact on water and sanitation services.
Unctad said in the fourth quarter of 2023, Gaza registered its largest economic slump in recent history. GDP contracted by 80.8% compared with the third quarter of 2023, while GDP a head fell by 81.4% over the same period.