Gaza's economy could take decades to recover, says UN

Unctad estimates that, as of late November, about 18 per cent of Gaza's total structures had been damaged or destroyed

Palestinians look at the destruction after an Israeli strike in Rafah, southern Gaza Strip. AP

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

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

Unctad, which aims to provide economic and trade analysis to help developing countries, 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 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,” according to the report.

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

“The military operation has greatly accelerated the decline and precipitated a 24 per cent GDP [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 seen in the past 15 years of 0.4 per cent, it would take seven decades for the territory to return to its 2022 GDP level.

It also highlighted the importance of breaking the cycle of destruction and rebuilding in Gaza, which has been hindered by decades of occupation and the blockade.

To foster growth, the UN trade body suggests key initiatives such as reviving the Gaza International Airport, constructing a seaport and enabling the development of offshore natural gasfields by the Palestinian government to fund infrastructure repairs.