Fact Chronicles | The economic impact of destruction in war-torn Gaza

ByElizaveta Gladun

Fact Chronicles | The economic impact of destruction in war-torn Gaza


The ongoing military conflict in Gaza between Israel and Hammas has exacerbated poverty levels to an unprecedented and alarming extent. Four months into the conflict, Gaza has seen its infrastructure leveled to the ground, economic activities brought to a standstill and millions of civilians displaced but with no way out of the besieged Gaza Strip. A preliminary report on Gaza made public by the United Nations Conference on Trade and Development warns that “it will take decades for Gaza to return to pre-October 2023 welfare levels”.

Key Statistics

  • The population increased from 1.349 million in 1995 to 2.227 million in 2023, a rise of 65%. Population density rose from 3,696 people/km² in 1995 to 6,101 people/km² in 2023, reflecting a similar increase of 65%.
  • Real GDP decreased from US$2.691 billion in 2006 to US$2.068 billion in 2023, a reduction of 23%. Real GDP per capita dropped from US$1,994 in 2006 to US$929 in 2023, a significant 53% decrease.
  • Poverty levels surged from 39% in 2006 to 96% in 2023, indicating a 146% increase. Gaza’s share in Palestinian GDP dropped from 31% in 2006 to 14% in 2023, reflecting a 55% decrease.
  • Unemployment soared from 35% in 2022 to a staggering 79% by December 2023. The labor force increased from 267,000 in 2006 to 531,000 in 2023, doubling over the period.
  • Nighttime luminosity (NTL) declined by 31.1% to 36.5% by December 2023 compared to the third quarter of the same year, indicating the halt in economic activity.

Impact on Poverty Levels

  • The destruction of civilian infrastructure, including residential buildings, schools, hospitals, and businesses, has left many families homeless and without a source of income. By the end of 2023, approximately 1.9 million people, or nearly 85% of Gaza’s population, were internally displaced.

With extremely limited opportunities for employment and economic activity, poverty is becoming entrenched, leading to a cycle of deprivation.

  • The disruption to essential services such as water, electricity, and healthcare is further exacerbating poverty as families struggle to meet basic needs. Limited access to clean water and healthcare services is increasing health risks leading to additional expenses and burdens on already impoverished households.
  • The blockade and restrictions on trade are seriously limiting economic opportunities and access to markets, hindering livelihoods and income-generating activities. The inability to import essential goods and technology is stifling entrepreneurship and economic development and will therefore perpetuate poverty.
  • The psychological impact of living in a conflict-affected area is further contributing to poverty levels as individuals and communities grapple with trauma, stress, and mental health challenges. Mental health issues can impair productivity and economic participation thus perpetuating cycles of poverty and vulnerability.

Actions to Address Poverty

  • Urgent international intervention is needed to address the root causes of poverty in Gaza, including an end to the conflict, the lifting of the blockade, and the provision of humanitarian aid and development assistance.
  • Reconstruction efforts must prioritize rebuilding infrastructure, restoring essential services, and promoting economic recovery to alleviate poverty and unemployment.
  • Long-term solutions, such as investing in education, healthcare, and sustainable economic development, are essential to break the cycle of poverty and to build resilience in Gaza.
  • Sustainable development in Gaza requires a comprehensive approach that addresses not only the immediate humanitarian needs but also the long-term socioeconomic challenges. This includes promoting inclusive growth, strengthening institutions, and empowering communities to build a more prosperous and resilient future.
  • International cooperation and solidarity are essential to support Gaza’s recovery and development. The international community must uphold its commitments to humanitarian principles and human rights, ensuring that everyone in Gaza has access to the resources and opportunities needed to thrive.

Pre-War Aid

Up until 2021, Gaza received billions of dollars in aid from the international community to provide relief to its over 2 million people deeply affected by the years-long blockade. Although the region was among the world’s top aid recipients for many years, the amount of aid varied annually depending on the political stance of the donors. According to the OECD, the following were the biggest donors to the Gaza Strip and West Bank between 2007 and 2022:

  • Europe with $17.5 billion
  • USA with $7.6 billion
  • U.N. agencies with $6.8 billion
  • Arab countries with $3.3 billion
  • Egypt pledged $500 million in aid in 2021
  • European nations directed tens of millions of euros toward vital water projects

Post-War Aid Needs

International agencies estimate that Gaza requires approximately $50 billion for rebuilding, a process that is expected to take seven to ten years, contingent upon a permanent ceasefire and the cessation of hostilities. However, they warned that the repercussions of the war will extend beyond physical reconstruction including the profound psychological trauma experienced by Gazans which may endure for generations.