Fundamental Shocks Pushed the Gazan Economy to the Brink of Collapse on the Eve of the War - Gaza War Economy Brief #3

author: Palestine Economic Policy Research Institute - MAS
year: 2023

It can be concluded from this Brief that with the Gazan economy ceasing activity in Q4 2023 indefinitely, combined with the destruction of the economic and residential infrastructure (continuing unabated for weeks, if not months), any discussion of economic ‘losses’ is unrealistic, useless and unhelpful. Gaza is a war between two powers, one of which is a military giant, driven by an economy 150 times larger than the size of the exhausted Palestinian economy in Gaza. The goal of restoring the Gaza Strip’s economy to what it was before 2023 is insufficient. It will not be possible to restart commodity trading and services - and mobilize finance - at the end of this war as long as the unprecedented (and as yet unknown scale of) humanitarian needs, namely, to feed, shelter, and care for more than two million displaced, wounded and traumatized persons in the Gaza Strip (already suffering  from significant deterioration since 2007). The levels of destruction and deprivation that will result from this war are simply unimaginable.

This summary monitors trends in Gazan economic indicators, identifying economic fluctuations and shocks during 2000-22, in order to clarify imbalances that already exist in the Gaza Strip’s economy on the eve of the start of the war. It highlights shocks that caused fundamental changes in the performance of the Palestinian economy, the decline in its indicators, and the scale of the impact of these shocks on the local economy. 

This methodology adopts a comparative, statistical approach covering Israel, Gaza, and the West Bank, based on international and global sources, various reports, and local studies. This summary tells the story of the deterioration of the Gazan economy during 2000-22, aiming to identify the ‘baseline scenario’ that  prevailed before the war. No single Palestinian party can reconstruct the Gaza Strip after the war, or restore its devastated economy, in the absence of generous international aid.

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