DayofPal—The economy of the occupied Palestinian territory has entered its most severe downturn on record, driven by Israel’s ongoing genocide in Gaza and longstanding restrictions on movement and trade, according to a new report from the UN Conference on Trade and Development (UNCTAD).
Released Monday, the report concludes that two years of intense Israeli military actions, combined with structural constraints imposed over decades, have produced one of the ten worst economic collapses worldwide since 1960.
“Extensive damage to infrastructure, productive assets and public services has reversed decades of socioeconomic progress in the occupied Palestinian territory,” UNCTAD said, referring to Gaza and the West Bank, including East Jerusalem. The situation in Gaza, it added, represents “the most severe economic crisis on record.”
The findings come as Israeli attacks on Gaza continue despite a six-week ceasefire with Hamas.
Israel’s subsequent military campaign and tightened blockade following Al-Aqsa Flood Operation have devastated Gaza. According to Gaza health authorities, at least 69,733 Palestinians have been killed and more than 170,000 injured since the war began, with hundreds more killed since the ceasefire took effect.
GDP Plummets to Historic Lows
UNCTAD reports that by the end of 2024, Palestinian GDP had fallen back to 2010 levels, while GDP per capita dropped to its 2003 level, effectively erasing more than two decades of development in under two years.
Gaza’s economy suffered an 83 percent contraction in 2024 alone, amounting to an 87 percent decline across two years. GDP per capita in the enclave plunged to just $161, placing it among the lowest globally. Nearly 174,500 structures have been damaged in Gaza, creating what the report describes as “near-total ruin.”
The West Bank is also undergoing its steepest recorded economic downturn, driven by severe restrictions on movement, the loss of employment opportunities, and rising instability.
Across both territories, UNCTAD warns, “the steepest economic contraction on record has wiped out decades of progress.”
A major factor in the crisis, the report notes, is Israel’s continued withholding of fiscal revenues collected on behalf of the Palestinian Authority (PA).
The PA said Monday that Israel is currently withholding $4bn, severely constraining its ability to pay salaries, maintain public services, and support reconstruction.
Recovery Could Take Decades
Reconstruction and economic recovery in Gaza alone will require more than $70bn, UNCTAD estimates. Even with substantial international aid, it warned, returning to pre-October 2023 economic levels “could take decades.”
The agency called for a coordinated international recovery plan, restoration of fiscal transfers to the PA, and urgent measures to ease restrictions on movement, trade and investment.
Without immediate large-scale intervention, the report says, the destruction caused by the war and the structural limits imposed on the Palestinian economy risk locking the region into a prolonged depression.
UNCTAD stressed that any meaningful recovery depends on a sustainable ceasefire. Its report urges the international community to “halt the economic freefall, address the humanitarian crisis, and lay the groundwork for lasting peace and development.”
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