The war in Gaza has left behind a trail of destruction, not only in terms of its buildings but also its fragile economy. The United Nations World Food Programme had already classified a majority of Gazans as food insecure, with limited access to affordable and nutritious provisions. However, the recent conflict has exacerbated the situation and pushed Gaza’s economy to the brink of collapse. Prior to the escalation, about 80% of Gaza residents relied on international aid, and now with the loss of access to Israel’s labor market, the economy has come to a standstill. Foreign aid is now the sole lifeline for the people of Gaza. The devastating consequences are evident in the skyrocketing unemployment rate, which currently stands near 100%. The enclave’s economy has effectively ceased all activity, leaving its young population without hope for an economic future.
One month into the war, Gazans have already lost around 182,000 jobs, which accounts for 61% of the workforce, according to the International Labor Organization. The United Nations Development Programme predicts that Gaza’s development will be set back by a staggering 16 to 19 years based on economic, health, and educational indicators. The initial attack by Hamas militants on October 7th, which led to Israel’s retaliation and subsequent bombings, claimed approximately 1,200 lives. In response, Israel launched air strikes and a ground invasion into the Gaza Strip, resulting in the deaths of over 14,500 people. The current state of Gaza’s economy contrasts starkly with its relatively better position during the Israeli occupation in the earlier years. Gaza had a working class employed in Israel and its own local economy, making it a significant contributor to the broader Palestinian economy. However, the conflict has severely crippled Gaza’s economy, rendering it almost nonfunctional.
The Impact of Political Changes and Regional Dynamics
Political changes and regional dynamics have further worsened Gaza’s economic situation. After Hamas gained control of Gaza in 2006, Palestinians lost the opportunity to work in Israel as the Israeli government revoked 18,000 permits that allowed Gazans to work and live in the country and its settlements in the West Bank. Additionally, the trade between Gaza and Egypt also declined, as Egypt views Hamas as a threat. Consequently, investments that were previously flowing into Gaza from the Palestinian Authority-governed West Bank halted, exacerbating the economic crisis. Moreover, since 2007, Gaza has been subject to a blockade imposed by Israel, which has further isolated the enclave from the outside world. These restrictions have severely hampered Gaza’s economic growth, with its already anemic progress falling far behind that of the West Bank in the last 15 years.
The consequences of the conflict, coupled with the pre-existing economic challenges, have created a bleak outlook for Gaza’s future. The blockade, recurring wars, and lack of economic opportunities have left Gaza’s youth without hope. As much as 65% of the population in the 140-square-mile strip of land is under the age of 24, and without the prospect of a better economic future, their aspirations are stifled. The International Monetary Fund highlights the significant disparity in economic growth between Gaza and the West Bank, further underscoring the dire situation. Ultimately, some form of a comprehensive deal to end the conflict is necessary to alleviate the suffering and revive Gaza’s economy. Countries like the Gulf Arab monarchies and Saudi Arabia may play a critical role in financially supporting the viability of Gaza in the future.
The war-ravaged Gaza Strip faces an extremely challenging economic reality. The conflict has further deepened the fragility of an already vulnerable economy. The loss of jobs, the setback in development, and the blockade imposed by Israel have all contributed to Gaza’s economic collapse. The international community must take action to provide the necessary aid and support to rebuild Gaza’s economy and offer hope for its young population. Only through sustainable economic development can Gaza begin to emerge from the ruins caused by years of conflict.