UNCTAD Report Highlights Urgent Need for International Aid and Strategic Solutions to Gaza's Economic Crisis

On January 31, UNCTAD released a report shedding light on the severe social and economic deterioration in Gaza since the commencement of military operations after October 7, 2023. The report provides a comprehensive analysis of GDP loss, recovery timelines, and the lasting impact on poverty and household expenditure, revealing the formidable development challenges that lie ahead.

Using innovative satellite imagery and official data, UNCTAD estimates that Gaza's economy had already shrunk by 4.5% in the first three quarters of 2023. The military operation significantly exacerbated this decline, resulting in a staggering 24% contraction of GDP and a 26.1% drop in GDP per capita for the entire year.

Even in an optimistic scenario with an immediate end to the military operation and reconstruction starting promptly, restoring Gaza's GDP to 2022 levels would take until 2092, with GDP per capita and socioeconomic conditions continuously declining. The most positive projection, a 10% annual GDP growth, would still require until 2035 for Gaza's GDP per capita to return to its pre-blockade level of 2006.

The report emphasizes that the recovery of Gaza's economy demands a financial commitment several times larger than the $3.9 billion resulting from the 2014 military operation and necessitates a concerted international effort to reinstate pre-conflict socioeconomic conditions.

Gaza, already facing dire conditions in 2022 and the first half of 2023, with two million people confined to densely populated spaces, inadequate access to water, sporadic electricity, and lacking proper sewage systems, now grapples with an even more critical situation. The ongoing military operation has displaced 85% of the population, ceasing economic activities and exacerbating poverty and unemployment.

As of December 2023, unemployment surged to 79.3%, and 18% of Gaza's structures, equivalent to 37,379 buildings, have been damaged or destroyed. With half of Gaza's population being children, the region is on the verge of becoming uninhabitable, lacking essential resources and access to water, sanitation, health, and education.

The report asserts that a return to the pre-conflict status quo is not an option, stressing the need to break the cycle of economic destruction that has left 80% of the population dependent on international aid. The speed and possibility of recovery depend on the end of the military operation, donor engagement, and subsequent economic growth.

Highlighting Gaza's economic constraints rooted in 56 years of occupation and a 17-year blockade, the report calls for realistic strategies to unlock growth potential. Suggestions include restoring the inoperable Gaza International Airport, building a seaport, and enabling the Palestinian government to develop natural gas fields discovered in the Mediterranean Sea to finance infrastructure reconstruction.

UNCTAD underscores the importance of immediate and robust budget support to the Palestinian government to prevent a wider collapse and sustain governance, essential public services, and aggregate demand. The report urges the end of the current military operation and lifting the blockade as pivotal steps toward realizing a two-state solution along the 1967 borders, in accordance with international law and relevant United Nations resolutions. It calls on donors and the international community to recognize that the constraints on the Palestinian economy extend beyond the recent confrontation.

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