Ashraf AboArafe
Geneva, 25 November 2025 — A new report by the United Nations Conference on Trade and Development (UNCTAD) warns that prolonged military operations and long-standing restrictions have pushed the economy of the occupied Palestinian territory into its deepest contraction on record, erasing decades of development gains and deepening financial and social fragility.
Titled “Developments in the Economy of the Occupied Palestinian Territory,” the report finds that two years of military escalation and stringent restrictions have triggered an unprecedented economic breakdown. This has unfolded within an already fragile institutional and economic landscape, with severe social and environmental consequences.
Massive damage to infrastructure, productive assets and public services has reversed decades of socioeconomic progress. The resulting economic collapse is now among the ten worst crises globally since 1960—with Gaza facing the most severe economic devastation of all.
At the same time, falling revenues and Israel’s withholding of fiscal transfers have severely constrained the Palestinian government’s ability to maintain essential public services and invest in recovery—just when massive spending is required to rebuild shattered infrastructure and address deepening environmental, social, and economic crises. The escalation has pushed the economy from long-term deterioration to near-total collapse, with far-reaching consequences across all sectors: economic, social, humanitarian, and environmental.
Multidimensional poverty now engulfs the entire population of Gaza, while the West Bank is experiencing its sharpest economic downturn ever, driven by rising insecurity, severe mobility restrictions, and the loss of productive opportunities across nearly all economic sectors.
By the end of 2024, the Palestinian GDP had fallen back to its 2010 level, while GDP per capita returned to its 2003 level—wiping out 22 years of development progress in under two years, according to UNCTAD.
Gaza’s Economic Collapse
For nearly two decades, 2.3 million Palestinians in Gaza have lived under severe restrictions on trade, movement, and access to resources in one of the most densely populated areas in the world. Restrictions on goods, productive inputs, equipment, and technology—combined with repeated military operations—have dismantled Gaza’s productive base, creating near-total dependence on external aid.
In 2024, Gaza’s GDP fell by 83% compared with 2023, following a steep decline the previous year. Over 2023–2024, GDP contracted by 87%, dropping to USD 362 million. GDP per capita plummeted to USD 161—among the lowest globally—amounting to just 4.6% of GDP per capita in the West Bank, despite parity between the two areas in 1994.
Widespread destruction of homes, facilities, and critical infrastructure has crippled access to food, water, healthcare, and public services, creating a severe humanitarian and economic emergency. The scale of devastation poses enormous challenges for recovery without robust international support.
UNCTAD warns that even with significant aid, restoring GDP to pre-October 2023 levels could take decades. A sustained ceasefire—such as the one agreed in October 2025—is essential, while humanitarian assistance remains urgent and non-negotiable.
Sharp Economic Contraction in the West Bank
The expansion of settlements and tightening movement restrictions continue to fragment the West Bank, disrupting trade, investment, and access to land, resources, and markets. These constraints affect more than 3.3 million people, raising transportation costs, extending travel times, and limiting access to jobs, education, and healthcare.
Since late 2023, mobility restrictions intensified, further reducing production and trade. GDP shrank by 17%, and GDP per capita declined by 18.8%, returning to levels last seen in 2014 and 2008, respectively.
Fiscal Pressures and Institutional Strain
The fiscal situation deteriorated sharply after October 2023, making 2024 one of the most difficult years for the Palestinian government. Declining revenues, withheld clearance funds, economic contraction, and falling donor support deepened the crisis.
Between January 2019 and April 2025, withheld fiscal transfers and deductions exceeded USD 1.76 billion, equal to 12.8% of 2024 GDP and 44% of net public revenues. Combined with a shrinking tax base and a steep drop in external aid, this severely constrained the government’s ability to pay salaries, maintain essential public functions, and provide basic services.
UNCTAD stresses the urgent need for sustained, substantial international financial support to stabilize public finances, safeguard institutional capacity, and support recovery and reconstruction efforts.
Rebuilding Gaza Will Cost USD 70 Billion
The estimated cost of reconstruction and recovery in Gaza exceeds USD 70 billion, underscoring the immense investment required to rebuild infrastructure and restore livelihoods.
UNCTAD calls for immediate and effective international intervention to prevent further economic collapse, address the humanitarian crisis, and lay the foundations for lasting peace and sustainable development. The report urges the development of a comprehensive recovery plan for the occupied Palestinian territory, supported by coordinated international assistance, the release of withheld fiscal transfers, and measures to ease restrictions on trade, mobility, and investment.
UNCTAD’s Role
For nearly four decades, UNCTAD has conducted policy research, technical cooperation, and capacity-building efforts supporting the Palestinian economy. Its work focuses on trade facilitation, productive capacity, and institutional development, in partnership with public, private, and civil society institutions. UNCTAD also works to strengthen international consensus around the needs of the Palestinian people and their economy.
