The Economic Repercussions of the Israeli War on the Gaza Strip and the Cost of Reconstruction

Study Summary

Phoenix Center for Research and Field Studies issued a field study titled "The Economic Repercussions of the Israeli War on the Gaza Strip and the Cost of Reconstruction." This study addressed the economic repercussions of the war on Gaza and the cost of reconstruction, as the military attacks on the Gaza Strip led to heavy losses of life, and the effects of the aggression on the Palestinian economy were as severe as the losses of life. In order to broaden the scope of the analysis — and in accordance with the study's methodology — Chapter One briefly reviewed the economic situation of the Gaza Strip on the eve of the aggression, where the weakness and fragility of the economic structure and its general framework became apparent: the Gaza Strip constituted a third of the Palestinian economy up until 2006, then declined to 17% by 2022; and in terms of annual performance, the economic growth rate for 2022 was negative, reaching -2.6%, while it reached 4% in the West Bank and 2.6% in Palestine as a whole. This led to a further decline in the average per capita share of GDP, which fell by 5.2% in the same year, slightly more than a third of its 2005 peak.

This weakness was reflected in the labor market in the Gaza Strip, where unemployment rates during the first three quarters of 2023 reached about 46%, with the unemployment rate reaching about 47% in 2021 and declining to 45.3% in 2022 amid recovery from the effects of the coronavirus pandemic. Likewise, the poverty rate rose to 60% compared to about 19% in the West Bank, and the World Food Programme reported that more than a third of the population is classified as suffering from food insecurity, while a proportion of 61% of them were classified as suffering from severe food insecurity in 2023, and a quarter of households were considered to be living in dire conditions, an increase of 20% over 2022. All of these negative indicators came within the context of restrictions imposed on economic activity as a result of the siege and the internal division, which together affected the private sector and its performance, and consequently overall economic activity.