Palestinian Territories Economy in Near-Total Collapse
HAVANA TIMES – Two years of war and persistent privations in Gaza and the West Bank have caused the collapse of the region’s entire economy, according to a report from the UN Trade and Development organization. Decades of progress have been wiped out in these Israeli-occupied Palestinian territories.
The current situation represents “an unprecedented collapse of the entire Palestinian economy, in a context of long-standing economic and institutional fragility that will have serious social and environmental consequences,” said the UN agency.
The report “Developments in the economy of the Occupied Palestinian Territory” concludes that after two years of war and restrictions, the resulting economic crisis is among the ten worst worldwide since 1960.
“But the situation in Gaza is different. It is the most serious economic crisis on record,” the report states.
The Gaza Strip, a thin band of land along the west coast of Israel, covers 365 square kilometers and is home to 2.3 million people, making it one of the most densely populated territories in the world. The Israeli assault on this territory has destroyed or damaged 174,500 structures (70% of the built environment), plunging its entire population into multidimensional poverty.
Unrelenting air attacks on the strip have devastated critical infrastructure, including factories, businesses, hospitals, schools, universities, residential buildings, and banks, along with vital energy, water, telecommunications, and agricultural infrastructure..
The violence began on October 7, 2023, when the Gaza-based Islamist militia Hamas attacked southern Israel, killing at least 1,100 people. In reprisal, Israel launched a large-scale military response which has cost the lives of nearly 70,000 Gazans, (83% of them civilians according to a leaked Israeli military database.)
Meanwhile, an estimated 1,000 people were killed in the West Bank during the Israeli assault on Gaza. These were principally victims of Israeli military and police operations, plus nearly unchecked violence from Israeli settlers in this separate occupied Palestinian territory in the eastern part of Israel.
The escalation caused the economy of the occupied Palestinian territory, already in a prolonged state of decline, to enter a phase of almost total collapse, with profound economic, social, humanitarian, and environmental repercussions.
Palestine’s total gross domestic product (GDP) in 2024 shrank to 2010 levels, barely 69% of the $16 billion peak reached in 2019.
In the Gaza Strip, GDP in 2024 contracted by 83% compared to 2023, following a sharp decline the previous year, leaving it at $362 million. Per capita GDP fell to $161, one of the lowest levels in the world, representing just 4.6% of that of the West Bank.
And while Gaza has collapsed completely, the West Bank is suffering its worst recession on record, due to increased insecurity, restrictions on movement, lack of access and loss of opportunities in all sectors of the economy.
The UNCTAD report notes that the sharp drop in revenues and the withholding of fiscal transfers by the Israeli government have greatly limited the Palestinian government’s ability to maintain essential public services and invest in recovery at a time when enormous resources are needed to reconstruct the destroyed infrastructure and confront the worsening environmental and socioeconomic crisis.
The destruction of infrastructure, loss of productive capacity, and population displacement have also inflicted lasting damage on human capital. In Gaza, these factors comprise a humanitarian and economic emergency. In its analysis, UNCTAD predicts that the disruption to education and basic services will have long-term effects on livelihoods and the foundations of social resilience.
The scale of the damage poses major challenges for economic recovery and the restoration of basic living conditions and the need for extensive international support.
But even with substantial aid, recovery to pre-October 2023 GDP levels could take decades, the report states. It highlights that for meaningful recovery to be possible, including access to healthcare, education, clean water, and essential infrastructure, the international community must ensure the durability of the ceasefire reached in October 2025.
In the short term, the delivery of humanitarian aid is urgent and cannot wait. Over a longer period,
the estimated cost of rebuilding and recovering Gaza exceeds $70 billion, “highlighting the scale of investment needed to rebuild infrastructure and restore livelihoods,” according to the study.
UNCTAD finally points to “the urgent need for sustained international financial support to stabilize public finances, safeguard institutional capacity and make possible the recovery and reconstruction efforts.”
The complete UNCTAD report can be found at: https://unctad.org/publication/report-unctad-assistance-palestinian-people-2025.
First published in Spanish by IPS and translated and posted in English by Havana Times.