How 'Israel's' Genocide Shattered Gaza, West Bank Economies: Report

By Al Mayadeen English

31 Dec 2024 20:51

The West Bank and Gaza have been facing a year marred by economic reductions and devastation, primarily due to the Israeli aggression on both.

The head of Palestinian Statistics, Ola Awad, reviewed the economic outcomes of the key economic and social indicators for 2024, a year marked by the continuation of Israeli aggression on the Gaza Strip, and presented her economic predictions for 2025. 

Palestine faces an economic, social, humanitarian, environmental, health, educational, and food disaster that has led to a contraction of the productive base and distortion of its economic structure. By the end of 2024, estimates indicate an unprecedented sharp contraction in Gaza's GDP by over 82%, accompanied by a rise in the unemployment rate to 80%.

This downturn extended to the West Bank's economy, shrinking by over 19%, with unemployment rising to 35%. Overall, the Palestinian economy shrank by 28%, accompanied by an increase in the unemployment rate to 51%. 

The complete collapse of economic activities 

It is worth noting that the Palestinian economy is primarily service-based, with 65% of its structure reliant on services, while productive sectors account for only 20%. This makes the economy highly sensitive to shocks but also capable of faster recovery due to its small size.

In 2024, key reductions were observed in most economic activities compared to the previous year. 

For example, the construction sector saw a 46% decrease in activity, 38% recorded in the West Bank and 98% in Gaza, with losses valued at $332 million.

The industrial sector declined by 33% (30% in the West Bank and 90% in Gaza), valued at $1,038 million, whereas agriculture fell by 32% (17% in the West Bank and 91% in Gaza), valued at $564 million. Meanwhile, services dropped by 27% (17% in the West Bank and 81% in Gaza), valued at $6,453 million.

Economic trade 

In 2024, occupied Palestine's trade declined by 11%, with exports dropping by 13% to $2,677 million and imports falling by 11% to $9,069 million. Imports remain over three times the value of exports, highlighting a significant trade deficit.  

Gaza's share of external trade fell to less than 4% due to Israeli aggression, resulting in a severe health and food crisis as essential supplies dropped to only 5% of the required levels.  

The share of imports from "Israel" decreased from 86% in 1996 to 60% in 2024, despite their value rising from $3,184 million to $4,815 million. Palestinian exports to "Israel" also declined, dropping from 94% of total exports in 1996 to 87% in 2024, though their value increased from $730 million to $2,304 million.

Unemployment rates 

Palestine suffers from high unemployment rates and regional disparities. In 2024, the unemployment rate in Palestine rose from 31% to 51%, with 35% in the West Bank and 80% in Gaza. 

Additionally, the labor force participation rate in Palestine decreased to 40% in 2024, down from 44% in 2023. In Gaza, it dropped to 36% from 40%, while in the West Bank, it fell to 43% from 47% over the same period.

Poverty and living standards

Before the onset of the Israeli aggression on Gaza, poverty rates exceeded 63%, with the poverty line in Palestine set at approximately 2,717 Israeli shekels and the extreme poverty line at 2,170 shekels.

Following the ongoing aggression, poverty has escalated to reach levels of famine and severe food insecurity. Total consumption dropped by 24% (13% in the West Bank and 80% in Gaza), directly impacting living standards and accompanied by rising unemployment rates. Most Palestinians in Gaza now face high levels of food insecurity.

Unprecedented price increases

Severe shortages of goods entering Gaza due to the Israeli aggression, combined with its repercussions on the West Bank and regional influences, have driven a sharp price increase.

Prices in Gaza surged by over 227%, while consumer prices in the West Bank rose by approximately 3%. This resulted in a 33% decline in purchasing power for Palestinians, with a 70% reduction in Gaza and 3% in the West Bank.

Checks

In 2023, check transactions in Palestine totaled $24 billion, with $1.5 billion returned due to insufficient funds.

By October 2024, check transactions had decreased to $17 billion, with $1.4 billion returned for insufficient funds. This reflects an increase in the percentage of bounced checks from 6% in 2023 to 8% in 2024. The decline in check transactions highlights a sharp economic contraction and reduced liquidity in Palestine.

Gaza economy left in 'utter ruin', 350 years needed to salvage Strip

The United Nations in October warned that Gaza's economy has been left in "utter ruin" due to the Israeli year-long war, with recovery to pre-war levels expected to take 350 years.

According to a report from the UN's trade and development arm (UNCTAD), the war that began last year has devastated Gaza's economy and infrastructure.

According to the report, the brutal strikes have resulted in "an unprecedented humanitarian, environmental and social catastrophe and propelled Gaza from de-development to utter ruin,” emphasizing that “the far-reaching repercussions will linger for years to come, and it may take decades to return Gaza to the status quo ante."

“Once a ceasefire is reached, a return to the 2007–2022 growth trend would imply that it would take Gaza 350 years just to restore GDP to its level in 2022.”