War-hit Gaza economy ‘could take decades to recover’

Tens of billions of dollars will be needed to rebuild Gaza when Israel’s war against Hamas is over, the UN has said.

The UN Conference on Trade and Development (Unctad) estimated that by late November, 37,379 buildings or 18 per cent of the Gaza Strip’s total structures had been damaged or destroyed in Israeli offensive.

It said that since the war erupted in the Gaza Strip following Hamas’s deadly October 7 attacks against Israel, the decline in living conditions had been “precipitous”.

Massive international aid would be needed, it said, especially if the goal is to push Gaza to a more sustainable living standard. “There is no doubt that it will amount to several tens of billions of dollars by any conservative estimation,” the report said.

According to the UN trade body, the recovery of Gaza’s economy from the current military operation will demand a financial commitment several times the $3.9 billion that resulted from the 2014 military operation in Gaza, and will involve a concerted international effort to restore pre-conflict socioeconomic conditions.

Gaza’s economy was already in dire straits in 2022 and the first half of 2023, with the enclave’s economy contracting by 4.5 per cent in the first three quarters of 2023. “Two thirds of the population lived in poverty and 45 per cent of the workforce were unemployed before the beginning of the latest military operation,” the report said.

In December 2023, the unemployment rate soared to 79.3 per cent, Unctad said.

“The military operation precipitated a 24 per cent gross domestic product contraction and a 26.1 per cent drop in GDP per capita for the entire year,” it added.

The report states that even if reconstruction started immediately and Gaza returned to the average growth rate of the past 15 years of 0.4 per cent, it would take seven decades for the territory to return to its 2022 GDP level.