Gaza economy collapses as genocide wipes out 69 years of progress

The United Nations has warned of an unprecedented collapse hitting the Palestinian economy in the Gaza Strip and the West Bank as a result of a war that has entered its second year and caused widespread destruction, wiping out decades of economic and social progress.

The new report issued by the United Nations Conference on Trade and Development (UNCTAD) on Tuesday presented one of the bleakest pictures of Gaza’s future, confirming that the sector has effectively entered a phase of ‘total destruction’ and that the effects of the war have gone beyond the boundaries of destroyed buildings to affect the very foundations of life itself.

22 years of development lost—69 years of human progress collapsed

The report showed that per capita GDP has fallen back to 2003 levels, a loss equivalent to 22 years of economic development. In parallel, the UN Special Rapporteur on human rights in Palestine, Francesca Albanese, confirmed that the war had ‘wiped out 69 years of human development’ that had formed the backbone of Palestinian society, including the health, education, financial and infrastructure systems.

UNCTAD explained that Gaza’s economy contracted by 87% between 2023 and 2024—a rate unprecedented globally since the 1960s—reducing per capita GDP to just $161, one of the lowest rates in the world.

Albanese summed up the situation by saying,

This is not a war… It is systematic economic destruction that is dismantling the ability of an entire society to survive.

The most widespread destruction since World War II

The UN report described the scale of destruction in Gaza as the largest of its kind in the world since World War II, both in terms of area and percentage of the population affected. The basic pillars of life—food, shelter, water, energy, and healthcare—have been almost completely destroyed.

The most notable losses included:

•  The destruction of thousands of factories and production workshops.
•  The collapse of water, electricity and sanitation networks.
•  The banking system was paralysed for months.
•  Hundreds of health and educational facilities were destroyed or closed.
•  The collapse of the population’s purchasing power to almost zero.
•  The elimination of food security stocks.

The United Nations has confirmed that Gaza today is ‘unviable’ without external support, and that the famine declared in several areas is only an indication of what is to come.

Gaza economy entirely dependent on aid

The report notes that the scale of the destruction makes Gaza completely dependent on international support for years to come, and that recovery is likely to take decades. The United Nations estimates that the first phase of reconstruction alone will require more than $70 billion, without taking into account the loss of human capital and social damage.

UNCTAD also warned that continued Israeli restrictions on the entry of construction materials and energy are hampering any attempt at economic recovery, stating that:

reconstruction cannot begin while Gaza is under siege and bombardment.

Compound crises: health, education, environment and society

The destruction was not only economic, but extended to all aspects of life:

• Almost complete collapse of the health system.
• A severe blow to education following the destruction of schools and universities.
• An environmental crisis resulting from water pollution and the breakdown of sanitation.
• A social crisis due to mass displacement and instability.
• Financial paralysis as a result of the closure of banks and lack of liquidity.

This series of collapses led the report to consider that Gaza had moved from a stage of “underdevelopment” to “complete destruction”, a situation that has not been recorded globally for seven decades.

Can Gaza’s economy be saved?

Despite the bleak picture, experts suggest realistic rescue paths, most notably:

1. Opening the crossings and ending the blockade:

Allowing trade, bringing in goods, and facilitating movement is the first step towards restoring economic life.

2. Launching an international reconstruction programme:

A plan similar to the Marshall Plan for Palestine, including:

• Rebuilding infrastructure (electricity, water, roads, hospitals).
• Rebuilding homes.
• Supporting financial institutions.
• Restoring transport networks.

3. Supporting local production and employment projects:

Operating small factories, urban agriculture projects, food, plastic and wood workshops, while providing small interest-free loans to productive families.

4. Building a resilient digital economy:

Focusing on digital education, remote working, programming and application development, and training young people in skills that are not affected by the blockade.

5. Establishing an international fund to compensate those affected:

Compensating displaced families, supporting students, and rebuilding vital institutions.

6. Reforming the financial system:

Restarting banks, injecting liquidity, and ensuring access to salaries.

The economic crisis in Gaza is not temporary, but rather a comprehensive collapse that has set it back decades. However, experience shows that Gaza, despite all it has been through, is capable of rising again. Its reconstruction is not only a humanitarian responsibility, but also a necessity for the stability of the entire region.

Featured image via UN News