UN warns of ‘unprecedented decline’ in Palestinian economy triggered by Israeli attacks

The United Nations Conference on Trade and Development (UNCTAD) has warned that the economy in the occupied Palestinian territories is facing an “unprecedented decline” due in large part to the Israeli army’s offensives, launched after the attacks by the Islamic Resistance Movement (Hamas) on October 7.

The United Nations agency published a report on Thursday that “reveals unprecedented economic devastation and decline” in the Palestinian territories, “much greater” than in other recent war contexts such as in 2008, 2012, 2014 or 2021. Inflation, unemployment and lack of income “have seriously impoverished” the population.

“The combined impact of the military operation in Gaza and its repercussions in the West Bank has caused an unprecedented shock that has affected the Palestinian economy throughout the occupied territory, including East Jerusalem,” the UNCTAD report said in its conclusions.

In the Gaza Strip, according to figures recorded at the beginning of the year, between 80 and 96 percent of “agricultural assets” – such as irrigation systems, livestock farms, orchards, machinery and storage facilities – have been destroyed.

This has brought food production to a standstill in the region and deepened already high levels of food insecurity. More than 80 percent of private businesses, a key part of the Gazan economy, according to UNCTAD, have also been damaged or destroyed.

Against this backdrop, the Gaza Strip’s GDP has plummeted by more than 80 percent in the last quarter of 2023 alone, leading to an annual contraction of 22 percent. By mid-2024, the Gazan economy had already shrunk by less than a sixth compared to 2022.

ECONOMIC CONSEQUENCES IN THE WEST BANK

While Israeli attacks are focused on the Gaza Strip, the West Bank has also seen a “rapid and alarming economic decline” due to settlement expansion, land confiscation, demolition of structures and increased settler violence.

One of the main indicators of this economic decline is tourism, trade and transport, key sectors for the West Bank, which have recently “suffered a sharp decline.” Around 80 percent of businesses in the Old City of East Jerusalem have partially or completely ceased their activities.

While estimates for the first three quarters of 2023 pointed to a 4 percent rise in West Bank GDP, the outbreak of hostilities following Hamas attacks led to an “unprecedented” 19 percent contraction in the latter part of that year.

As far as unemployment is concerned, the West Bank has seen the number of unemployed rise by almost 20 percent, from 12.9 percent in the third quarter of 2023 to 32 percent today. UNCTAD notes that “306,000 jobs have been lost,” resulting in losses of more than 23 million euros per day in household labor income.

In the Gaza Strip, data points to a loss of two-thirds of the jobs that existed before the outbreak of war in January 2024, which only deepens the already serious economic and humanitarian crisis in the Palestinian enclave.

UNCTAD has noted that “the prolonged occupation remains the greatest obstacle to sustainable economic development” and that restrictions on investment, labour mobility and trade “have systematically undermined the economic potential” of the Palestinian territories.

“The report echoes the call by UN Secretary-General Antonio Guterres to take urgent measures to support and strengthen Palestinian institutions, highlighting the need to intensify peacebuilding efforts,” UNCTAD said in its report.

As a “way forward” to turn this situation around, the UN agency urges consideration of a comprehensive recovery plan, increased international aid and support, as well as the release of withheld revenues and the end of the blockade on the Gaza Strip.