Gaza and the West Bank: The Economic Freefall Amid Unrelenting Conflict

The UNCTAD report on assistance to the Palestinian people reveals the devastating economic collapse in Gaza and the West Bank due to military conflict, highlighting widespread unemployment, poverty, and infrastructure destruction. With Gaza's economy contracting by 81% and the West Bank suffering a 19% economic decline, the region faces a humanitarian crisis. The report calls for international intervention to lift restrictions and support the rebuilding of the Palestinian economy.

The Palestinian economy is on the brink of collapse following one of the most severe confrontations in its recent history. A new report from the United Nations Conference on Trade and Development (UNCTAD), titled "Report on UNCTAD Assistance to the Palestinian People," paints a grim picture of a region reeling from economic devastation, escalating unemployment, and widespread poverty. Released during the 30th anniversary of the Oslo Accords, this report underscores the urgent need for humanitarian and economic intervention to restore stability in the region.

Gaza: A Humanitarian and Economic Collapse

In late 2023, Gaza endured a brutal military operation that left the region's economy shattered. The report highlights that Gaza’s gross domestic product (GDP) contracted by an astounding 81 percent in the last quarter of 2023, pushing unemployment rates to a staggering 79 percent. The military strikes destroyed essential infrastructure, including schools, hospitals, and housing units, plunging the population into a humanitarian crisis of unprecedented proportions. By the beginning of 2024, over three-quarters of Gaza’s 2.3 million people were displaced, with the entire population engulfed in multidimensional poverty.

Before this latest crisis, 80 percent of Gazans already depended on international aid to survive, with the local economy deteriorating since 2007. The military confrontation only amplified these struggles, bringing Gaza to the brink of total economic collapse. The destruction of key industries, especially agriculture, where 80-96 percent of assets were destroyed, has left many without livelihoods, and the consequences for food security are dire.

The report describes Gaza as an example of a region transitioning from arrested development to full-scale destruction. With infrastructure in ruins and economic activity reduced to less than 20 percent of its 2022 levels, it may take decades to rebuild the area. UNCTAD warns that the lasting impact of this devastation will be felt for generations to come, as it will hinder efforts to achieve sustainable development and exacerbate poverty and food insecurity.

The West Bank and East Jerusalem: Widespread Displacement and Restrictions

The West Bank and East Jerusalem, though less impacted than Gaza, have also suffered significant economic damage. The economy of the West Bank shrank by 19 percent in the final quarter of 2023, with unemployment levels rising to 32 percent. As the violence spread across the region, the occupying power tightened longstanding restrictions on movement and access, further crippling the local economy.

The increase in military checkpoints, rising from 567 to 700 by early 2024, and the closure of Palestinian towns and villages have hindered daily life and severely disrupted the flow of goods and services. This stranglehold on mobility has paralyzed local industries, with 96 percent of private sector establishments in the West Bank reporting decreased sales and nearly half experiencing layoffs.

East Jerusalem, once a vibrant center of commerce, tourism, and cultural activities, has seen its economy grind to a halt. With the downturn in tourism, occupancy rates in hotels have plummeted, and local businesses have been forced to shut down. The impact has been devastating for households, many of which are turning to unsustainable measures such as selling assets or borrowing to survive.

Widespread Multidimensional Poverty

Across the Occupied Palestinian Territories, the situation is dire. Poverty rates have soared to levels not seen before. In Gaza, multidimensional poverty—where people lack access to adequate shelter, food, water, sanitation, and education—has now affected nearly the entire population. Over 75 percent of Gazans have been internally displaced due to the destruction of their homes.

The report underscores that the Palestinian Authority is struggling to provide basic services, including health care and education, as resources have dried up. Due to Israeli withholding of revenue and dwindling international aid, the authority faces an unprecedented fiscal crisis. Public sector employees have only received partial salaries since 2021, with more than 306,000 jobs lost in the West Bank alone since October 2023.

UNCTAD’s Call for Action

UNCTAD’s report calls for an immediate response to the escalating humanitarian and economic crises. The organization stresses the need for lifting the ongoing restrictions that hinder movement, trade, and investment across the Occupied Palestinian Territories. The region's long-term recovery depends on restoring trade, easing military occupation, and reinvigorating international aid.

UNCTAD has been at the forefront of advocating for Palestinian economic recovery, providing technical cooperation and capacity-building to mitigate the impact of occupation. The report also outlines the organization’s efforts to assess the damage and provide a framework for rebuilding, but notes that without significant policy changes and increased international support, these efforts will only be a drop in the ocean compared to the scale of devastation.

The outlook is bleak, but UNCTAD's assessment serves as a rallying cry for action. Without an immediate and comprehensive international effort to address the underlying causes of the crisis, including the occupation and economic restrictions, the region will remain mired in poverty and instability for years to come.