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E/ESCWA/UNDP/2023/Policy brief.1
Gaza war: expected socioeconomic
impacts on the State of Palestine
Preliminary estimations until 5 November 2023
©UNDP
Key messages
The Gaza war has already caused massive loss of life
and infrastructure damage, which will have short- and
long-term socioeconomic consequences, and cause
long-term deprivation and a reduction in human
development that will propagate to all the occupied
Palestinian territory.
Massive
loss of life
Massive
infrastructure
damage
Note:
Figures and estimations in the present paper do not include occupied East Jerusalem for lack of data.
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2
The shock to Palestinian economic activity
has been severe as a result of the total
siege of Gaza, destruction of capital, forced
displacement, restrictions on movement of
people and goods in the West Bank.
While around 390,000 jobs have already been
lost since the start of the war, early estimates
(figure 1) indicate that the gross domestic
product (GDP) loss in 2023 could range
between 4 and 12 per cent, and between
4 and 9 per cent of GDP in 2024, compared
with pre-war estimates, depending on the
duration of the war.
Poverty is also expected to rise sharply by
between 20 and 45 per cent, depending on the
duration of the war.
1
A sharp decline is expected in the Human
Development Index (HDI), setting the State
of Palestine back by between 11 and 16 years,
depending on the intensity of the conflict.
390,000
jobs
lost
Poverty
expected to
rise
between
20%
and
45%
HDI
of the
State of
Palestine
set back between
11
and
16
years
The economic consequences of the war will have direct
and indirect effects on the humanitarian situation, and
vice versa, including large-scale displacement.
Economic recovery in Gaza following a ceasefire will not
be immediate, considering the large-scale destruction
and uncertain access to resources, including materials
and equipment owing to the siege on Gaza.
regional impacts
of the Gaza war
Multi-
layered
The regional impacts of the Gaza war are multi-layered
and dependent on the scale and scope of the military
escalation.
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Figure 1. 
Impact of one-month, two-month and three-month war scenarios on GDP, private consumption
and poverty in the State of Palestine (Percentage change relative to levels expected for 2023)
GDP
50
40
30
20
10
0
-10
-20
-30
-4.2
-8.4
Private consumption
Poverty
45.3
34.1
19.5
-12.2
-7.9
-13.6
-18.3
One-month war
Two-month war
Three-month war
Source:
Estimates based on the computable general equilibrium (CGE) model simulations of the Economic and Social Commission
for Western Asia (ESCWA), and calculations from the United Nations Development Programme (UNDP) economists, using available
data and the international poverty line of $6.85 (2017 PPP) as at 28 October 2023. Estimates are subject to change once more
data become available.
in Gaza following
a ceasefire will
not be immediate
Economic
recovery
©UNDP
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1
Impact on lives
With a density of about 6,300 people per km
2
,
Gaza is one of the most densely populated
regions worldwide. Some parts of northern Gaza
have a population density of over 30,000
per km
2
. Around 40 per cent of Gaza’s population
are children under the age of 15, and 60
per cent of the population are refugees. Living
conditions in Gaza on the eve of the war were
already precarious in view of the Israeli blockade
imposed since 2007 coupled with recurrent
military escalations, leading to rampant poverty,
unemployment and food insecurity.
2
The toll of the current war on human life has
been unprecedented.
By 3 November 2023, four
weeks into the war, the reported death toll in
Gaza due to Israeli bombardment and military
operations had reached
9,770, including 4,008
children and 2,550 women (67 per cent of all
fatalities), (figure 2).
3
At least 23,516 people
have been injured
4
and around 2,100 have
been reported missing in Gaza, including
1,200 children who are likely trapped or dead
under the rubble.
5
The reported death toll,
reached in only four weeks, has already far
surpassed the toll of all past violent escalations
since 2007 combined. The number of children
reportedly killed in a little over three weeks
in Gaza has exceeded the total number of all
children killed each year since 2020 in armed
conflicts in more than 22 countries.
6
In the West Bank, tensions are escalating.
According to the United Nations Office for the
Coordination of Humanitarian Affairs (OCHA), by
3 November 2023, 135 Palestinians had been
killed by Israeli security and military forces and
by settlers, including 42 children, with at least
2,247 people injured.
7
In Israel, 1,400 people were
killed and at least 5,400 wounded.
8
The current war has already resulted in more
than twice as many internally displaced
persons (IDPs) as the 2014 war.
9
The number
of IDPs in Gaza since the start of the war is
estimated at almost 1.5 million.
10
This
massive displacement has occurred amid
severe humanitarian conditions, including
a shortage of electricity, food, water and
medicines, caused by the total siege of Gaza
since 9 October 2023. This has exacerbated
the longstanding humanitarian crisis resulting
from the 16-year blockade of Gaza. By
3 November 2023, a total of 421 trucks carrying
humanitarian supplies entered Gaza through
the Rafah crossing with Egypt. These supplies
are just 3 per cent of the pre-war inflow into
Gaza and, according to the United Nations, just
15 per cent of what is needed since the start of
the war to prevent further deterioration in an
already dire humanitarian situation. In addition,
the entry of fuel into Gaza remains banned.
11
Death toll
9,770
including
4,008
2,550
children women
©UNDP
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5
Figure 2. 
Total fatalities in Gaza by age and sex during major escalations, 2008–2023
12,000
10,000
9,770
8,000
6,000
4,008
2,251
2,000
1,385
333
0
114
168
36
14
551
299
261
67
42
7-5 November 2023
(30 days)
Children
Women
2,550
4,000
December 2008 -
January 2009 (23 days)
November 2012
(8 days)
July-August 2014
(50 days)
May 2021
(11 days)
Fatalities
Source:
Compiled by UNDP based on OCHA database for historical records, and on OCHA, Hostilities in the Gaza Strip and Israel, flash updates #1–28.
2
Health-related impacts
Since the start of the Gaza war, over one third
of its hospitals and almost two thirds
of health-care centres have shut down,
either owing to damage sustained due to
Israeli bombardment or a lack of fuel because
of the siege. By 3 November 2023, the World
Health Organization (WHO) had documented
101 attacks on health-care facilities in Gaza;
the remaining 13 hospitals still operational
in Gaza City and North Gaza have received
evacuation orders.
12
Health-care facilities
across Gaza may have to stop working if the
fuel shortage and bombing continue. The
still-functioning hospitals have been forced to
operate at their bare minimum owing to a lack
of fuel,
13
and are overwhelmed by increasing
numbers of casualties. The number of wounded
14
has already surpassed by more than six times
the 3,500 beds
15
that hospitals had before the
war. In addition to the severe damage to health
infrastructure, the siege of Gaza has resulted in
a critical shortage of medical supplies.
16
Moreover, about 50,000 Gazan women
are estimated to be pregnant, including
5,500 expected to have delivered within one
month from the start of the war and another
5,500 estimated to deliver in the second
month of the war, amid a shortage of
neonatal care.
17
Furthermore, a lack of access to food, water
and electricity is likely to exacerbate the health
situation, especially for those with chronic health
conditions.
18
The average water consumption
for all needs, including drinking, cooking and
hygiene, was estimated to have dropped to
three litres
19
per day per person by 20 October
2023, compared with the pre-war consumption
level of 80 litres per day per person, which
was already significantly below the minimum
standard recommended by the WHO (150 litres/
day per person). Current water consumption in
Gaza has plummeted to an average of 8 per cent
of pre-war daily levels.
20
All five wastewater
treatment plants have shut down owing to fuel
shortages or damage, and the accumulation of
solid waste continues to pose an immense public
health risk in overcrowded shelters.
21
The people of Gaza were already in a
heightened state of stress.
This is bound
to have exponentially worsened since the
beginning of the war, given the severe
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stressors the Palestinians are experiencing.
The State of Palestine was already ranked the
fourth highest Arab country in terms of stress
prevalence (37.6 per cent). It also ranked
third in depression prevalence (34.7 per cent).
Gaza, in particular, experienced a significantly
higher prevalence of stress (47.4 per cent) and
depression (50.8 per cent).
22
The war will have a disproportionate
impact on persons with disabilities.
About
6.8 per cent of the total population in Gaza are
categorized as persons with disabilities — higher
than the country average estimated at 5.8
per cent.
23
This number is likely to increase owing
to a mounting number of injured and decreasing
health-care capacities.
3
Building and infrastructure damages
At least 45 per cent of the housing stock
in Gaza has been reportedly destroyed or
damaged by Israeli bombardment.
24
By
3 November 2023, at least 35,000 housing
units had reportedly been completely
destroyed, while about 212,000 units had
been partially damaged.
25
Over 40 per cent
of education facilities have been damaged,
including at least 33 schools of the United
Nations Relief and Works Agency for
Figure 3. UNOSAT
damage assessment in Gaza
Source:
UNOSAT (accessed on 30 October 2023).
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7
Palestine Refugees in the Near East (UNRWA).
26
As a result, 625,000 students have no access
to education.
27
On 3 November 2023, UNDP conducted a
preliminary damage assessment of buildings
using the United Nations Satellite Centre
(UNOSAT) rapid comprehensive damage
assessment for five governorates: North Gaza,
Gaza City, Deir Al-Balah, Khan Yunis and Rafah
(figure 3). This assessment indicates that
between
4.2 and 6.6
per cent of structures
located in those governorates have been
destroyed or damaged. Moreover, according to
a damage analysis of satellite data conducted
on 28 October 2023, and published by the
Washington Post on 1 November 2023, almost
30,000 buildings north of Gaza’s wetlands have
been damaged.
28
However, satellite imagery can
underestimate damages as it can only detect
damage to rooftops not sides of buildings, and
buildings may also house a varying number of
housing units.
29
Using night-time light satellite imagery, UNOSAT
estimated that 90 per cent of luminosity was
lost in some areas of Gaza by 11 October 2023,
compared with 14 September 2023 (figure 4).
The Khan Younis Governorate suffered the most
severe power outage, with a loss rate of around
95 per cent.
30
Luminosity has remained very low
since then across Gaza.
According to the agriculture damage
assessment conducted by UNOSAT in just two
governorates, North Gaza and Gaza City, over 36
per cent of greenhouses have been destroyed or
damaged by the war. Moreover, 1,023 fields have
been damaged, as evidenced by the presence
of craters by 15 and 26 October, respectively, in
North Gaza and Gaza City.
Satellite imagery also shows a total of
539 damaged segments across the road
network in northern Gaza.
Since 7 October 2023, Israel has completely
cut off water flow to Gaza several times,
including on 9 October 2023, and most recently
on 30 October 2023. By 4 November 2023,
20 water and sanitation facilities had been
destroyed.
31
A lack of fuel has caused total
disruption or inadequate operation in the
delivery of services, such as water, sewage
pumping stations, wastewater treatment
plants and electricity.
32
By 4 November 2023,
60 municipal water wells and at least 25
sewage pumping stations had shut down owing
Figure 4. 
Night-time satellite imagery
variation in Gaza (14 September–11/12 October
2023)
Source:
UNOSAT (accessed on 17 October 2023).
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to a lack of fuel and the inability of personnel
to reach them.
33
This level of destruction will set Gaza back by
many years. It will not only reduce short-term GDP
growth, but will also have long-term implications.
Moreover, if previous reconstruction efforts
are to be taken as a reference, reconstruction
will be slow, with severe consequences for
economic activity, health, education and long-
term development prospects. For example, one
year following the 2021 offensive, only 200 of
the 1,700 destroyed houses had been rebuilt.
34
In
addition to the large amount of financing required
for reconstruction, a ban on dual-use building
materials allowed through border crossings means
that rebuilding efforts are unlikely to proceed at
the necessary pace.
4
Poverty, food insecurity and human development
The incidence of poverty and food insecurity
will further increase in the State of
Palestine.
The socioeconomic situation of
Gazan households was already dire before
the current war, which is expected to have a
profound and multifaceted impact. The poverty
rate in Gaza (as defined by the national
poverty line) is estimated to have reached
61 per cent in 2020.
35
According to ESCWA
computable general equilibrium (CGE) model
simulations for the State of Palestine
36
,
considering three scenarios for the war, the
poverty rate (using the international poverty
line more appropriate for higher middle-income
countries) is expected to increase from the
current calculated baseline of 26.7 per cent
for 2023 to 31.9 per cent in the one-month
war scenario, to 35.8 per cent in the two-
month scenario, and to 38.8 per cent in the
three-month scenario.
37
Acute or moderate food insecurity already
affected 62.9 per cent of households in Gaza
in 2022. Over 73 per cent of households in Gaza
reported having received humanitarian aid in
the six months prior to the assessment, while
over 50.5 per cent of households stated ‘non-
governmental organization (NGO) or charity
assistance’ as their main source of income.
38
The war has so far caused an increase in food
prices in Gaza, and food stocks are running
out.
39
This has raised the risk of malnutrition,
particularly among pregnant women, infants
and young children, which can lead to cognitive
impairment, potential onset of disease, and
eventually pandemics.
40
In 2021, stunting in Gaza
affected more than 10.3 per cent of children
under five, while underweight and wasting
affected 2.5 per cent and 2.4 per cent of children,
respectively.
41
By 3 November 2023, food stocks
were reported to be sufficient for less than a
week, and the only operative mill cannot grind
wheat owing to electricity outages.
42
©UNDP
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Rising poverty and food insecurity are also
expected to significantly impact newly
formed female-headed households. Since
the start of the current war, 1,725 new
households are now headed by women in
Gaza as a result of the death of their male heads,
and 23,181 female-headed households have lost
their homes.
43
Their situation will be especially
difficult if the new female head is unemployed, or
has never participated in the labour market.
Multidimensional poverty has increased.
It is
expected to deteriorate as the war takes its
toll on education, health and basic services,
and as the limited fiscal space diminishes
the efficiency of existing social protection
programmes, leaving the increasingly
vulnerable population without adequate support
to cope with the consequences of war.
44
By the beginning of the third week of the war,
nearly all of the Gazan population was estimated
to have become multidimensionally poor (96
per cent) based on the national multidimensional
poverty index (MPI), which counts the
simultaneous deprivations people face across
seven dimensions of well-being and includes
22 indicators tailored to the Palestinian context
(as opposed to the global MPI, which is tailored
to capture more extreme forms of deprivation
in the poorest countries worldwide).
45
In other
words, almost all of the 2.3 million Palestinians
residing in the enclave are multidimensionally
poor and require basic support for survival.
46
The war will likely result in a significant drop
of overall human development by 11 to 16
years for the State of Palestine, owing to
diminished educational attainment, lower life
expectancy, a decline in per capita income,
and undernourishment.
HDI declined from
0.703 in 2013 to 0.698 in 2014, and from 0.716
in 2020 to 0.715 in 2021,
47
in the aftermath of
the July–August 2014 escalation and the May
2021 escalation, life expectancy declined by
1.4 years. Given the magnitude of the current
war (over three times as many fatalities in
less than half the time, and much greater
overall infrastructure damage), along with the
CGE model estimates on the decline of GDP, a
strong impact on HDI is expected.
The impact of the war on HDI was assessed
under several scenarios (figure 5). Scenario 1
assumes a one-year reduction in life
expectancy, a 0.5-year decrease in expected
years of schooling, no impact on mean years of
schooling, and a 10 per cent decline in the gross
national income (GNI) per capita compared with
2021. The simulation shows that HDI will decline
from 0.715 in 2021 (latest available data) to
0.700 in the post-war period, which would set
the State of Palestine back by approximately
11 years (to 2012 levels).
Figure 5. Reduction
in HDI for the State of Palestine, simulation results
Back by 11 years
to 2013 HDI level
0.715
16
14
0.7
0.69
0.683
0.68
0.674
0.67
0.66
0.65
0.7
11
12
0.692
Back by 12 years
to 2011 HDI level
Back by 14 years
to 2009 HDI level
Back by 16 years
to 2008 HDI level
0.72
0.71
18
16
14
12
10
8
6
4
2
No war
Scenario 1
Scenario 2
HDI
Scenario 3
Scenario 4
0
Deterioration in levels of human development in years
Source:
UNDP Human Development Reports, State of Palestine.
Note:
The right axis indicates HDI levels and the left axis indicates the number of years of development lost. Post-war figures are UNDP
estimates based on four scenarios, as described in the text.
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Figure 6. Reduction
in HDI at the subnational level, simulation results
0.74
0.721
0.72
0.705
0.7
11
0.68
0.674
8
0.66
0.656
6
4
2
0.62
No war
Gaza HDI
West Bank HDI
Scenario A
Gaza HDI reduction, years
Scenario B
West Bank HDI reduction, years
0
16
0.718
0.706
19
20
18
16
14
12
10
8
0.64
Source:
UNDP estimates using subnational data from the Subnational Human Development database, version v7.0. Aggregated data for
Gaza and the West Bank are arithmetic means of the respective regional HDIs.
In scenario 2, the impact on educational
attainment remains constant, given that these
indicators tend to change slowly. This scenario
assumes a two-year decline in life expectancy
and a decline in GNI per capita of 15 per cent
compared with its 2021 level. The simulation
indicates that HDI will drop to 0.692 in the post-
war period, effectively setting the HDI of the
State of Palestine back to its 2011 levels, thus
setting the country back by 12 years.
Scenario 3 assumes that expected years of
schooling decline by one year, no impact on mean
years of schooling, a three-year decline in life
expectancy, and a decline in GNI per capita of
15 per cent compared with its 2021 level. Under
this scenario, the simulation indicates that HDI
will drop to 0.683 in the post-war period, back
to levels seen in 2009, thus setting the State of
Palestine back by 14 years.
Given the current trends in the number and age
structure of fatalities, 40 per cent of whom are
children, estimates suggest larger reductions
in life expectancy, if the same pace of fatalities
continues until December 2023.
Scenario 4 assumes a five-year decline in life
expectancy, while holding the rest of scenario 3
assumptions constant. This would drag HDI down
to 0.674, and would set the country back by 16
years (to 2007 levels).
However, averages hide the details of the human
development impacts at the subnational level.
Assuming a scenario of
a two-year reduction in life expectancy,
a one-year reduction in expected years of
schooling, no reduction in mean years of
schooling, and a 20 per cent decline in GNI per
capita in Gaza, HDI for Gaza is estimated to
drop to 0.674 from the estimated level of 0.705
in 2021, thus pushing back HDI for Gaza to the
level observed in 2007. Alternatively, assuming a
five-year reduction in life expectancy, a one-year
reduction in expected years of schooling, a 0.5-
year reduction in mean years of schooling, and a
20 per cent decline in GNI per capita in Gaza, HDI
is projected to further drop to 0.656, which is the
level observed in 2004.
In the West Bank, assuming no reduction in
life expectancy, no reduction in expected years
of schooling, no reduction in mean
years of schooling, and a 5 per cent decline in GNI
per capita, HDI for the West Bank is estimated to
become 0.718 from an estimated level of 0.721 in
2021. Alternatively, assuming
a one-year reduction in life expectancy,
a 0.5-year reduction in expected years of
schooling, no reduction in mean years of
schooling, and a 10 per cent decline in GNI per
capita, HDI will drop to 0.706, which is the level
observed in 2012.
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5
Economic implications of the war
The present paper estimates the economic
impact of the current war under various
assumptions and expert opinions, as well as
through a dynamic CGE model for the State of
Palestine, so as to further analyse the specific
economic impacts of the conflict. In the CGE
model, three scenarios of the current war were
considered, along with their corresponding
transmission channels of its effects. The first
scenario assumes a one-month duration of the
war and a 4 per cent capital stock destruction
during that month for the whole of the occupied
Palestinian territory. The second scenario
assumes a two-month spell of the war and a
6 per cent capital stock destruction. The third
scenario estimates a three-month duration
and a 7 per cent capital stock destruction.
The simulation also assumes that total factor
productivity will drop to zero in Gaza, and to
50 per cent of its monthly average in the West
Bank. Moreover, all financial flows – both public
and private – into the occupied Palestinian
territory are postulated to stop during the
assumed duration of the war.
A. Expected impact on jobs and businesses
Unemployment in Gaza was already three and
a half times higher (46 per cent) than the West
Bank (13 per cent). The two governorates from
which Israeli authorities ordered the evacuation
of civilians, namely North Gaza and Gaza City,
accounted for 56.2 per cent of total employment
in Gaza. Unemployment is higher among women
(66.2 per cent in Gaza compared with 29 per cent
in the West Bank) and young graduates (74
per cent in Gaza compared with 29 per cent in the
West Bank).
48
Services employ the highest share of
workers, followed closely by commercial activities,
restaurants and hotels. Employment in services
such as tourism tends to be highly vulnerable
to shocks.
49
The State of Palestine also suffers
from a high rate of informality (53 per cent of all
workers in 2022), where jobs lack social security
and other benefits and protections. About 14
per cent of the Palestinian labour force
50
works in
Israel or in Israeli settlements, with around 20,000
workers from Gaza, according to the International
Labour Organization (ILO).
51
Since the Israeli authorities cancelled their permits
at the outset of the current war, thousands of
Palestinian workers have been stranded in the
West Bank or detained by Israeli authorities,
52
many of whom were released back to Gaza on
3 November 2023.
53
Israel has suspended
work permits for all Palestinians workers in
its territory since the start of the war, who
generate an estimated income of about
$3 billion a year. Furthermore, the Israeli-
imposed restrictions on movement within
the West Bank are creating difficulties for
around 67,000 Palestinian workers who have
©UNDP
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jobs in governorates other than their place
of residence, putting them at risk of losing
their jobs.
54
Previous studies have indicated
a strong impact of violence and mobility
restrictions on wages, employment and GDP
in the State of Palestine.
55
As the war hits the one-month mark, 61
per cent of employment in Gaza, equivalent
to 182,000 jobs, is estimated to have been
lost, according to ILO. Around 24 per cent of
employment in the West Bank has also been
lost, equivalent to 208,000 jobs.
56
Preliminary
ESCWA CGE model results show an increase
in unemployment of between 5 and 13
percentage points compared with 24.7 per cent
unemployment just before the current war,
depending on the duration of the war.
Conflict can also have multifaceted
repercussions on businesses. The current
war could particularly hurt the operations of
micro, small and medium enterprises, which
are estimated to comprise 98 per cent of
all enterprises in the State of Palestine and
already have limited capacity and resources
to withstand shocks, thus increasing
unemployment levels.
B. Macroeconomic aspects
Preliminary calculations point to a potential
GDP loss of up to 15 per cent for a three-month
war compared with the level projected for 2023
before the war. In addition, the dynamic CGE
model for the State of Palestine, examining three
scenarios described at the beginning of the
present chapter, shows that all three scenarios
point to a significant slowdown in economic
activity in the occupied Palestinian territory.
As the war hits the one-month mark,
Palestinian GDP is expected to have declined
by about 4.2 per cent compared with pre-war
estimates for 2023, a loss of about $857 million.
If the war extends to a second month, the
estimated economic loss would rise to 8.4 per cent
of GDP, or $1.7 billion. If it extends to a third
month, the loss would rise to 12.2 per cent
of GDP, or $2.5 billion (figure 7).
The drop in GDP is expected to be due to
a reduction in trade and capital inflows,
future investments and productivity, higher
production costs including for transport
and greater overall insecurity,
57
with lasting
negative effects on potential output and
productivity for years to come. Moreover, as
the war approaches the one-month mark, total
investment is expected to have declined by
up to 15.3 per cent compared with pre-war
estimates for 2023, while total exports and
imports are expected to have declined by up
to 13.2 per cent and 4 per cent, respectively. If
the war extends to three months, investment
is estimated to decline by up to 44.3 per cent,
exports by up to 27.7 per cent, and imports
by up to 14.3 per cent. It is therefore clear
how quickly the economic effects of the war
worsen as it protracts.
Figure 7. GDP
loss for the State of Palestine in 2023 in the one-, two- and three- month war scenarios
(Billions of dollars)
One-month war
Two-month war
Three-month war
0
-0.5
-1
-1.5
-2
-2.5
-3
-0.857
-1.7
- 2.5
Source:
Estimates based on ESCWA CGE model simulations, and calculations from ESCWA and UNDP economists, using available data as at
28 October 2023. Estimates are subject to change once more data become available.
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13
The war will likely also have effects on GDP in
2024. Under an optimistic scenario where all
economic activity returns to normal, and only
the capital stock destruction effect continues
to propagate through the economy in 2024,
GDP in 2024 will decline by an additional
$904 million (4.2 per cent of expected 2024
GDP) if the war lasts one month, an additional
$1.5 billion GDP loss (6.9 per cent of 2024 GDP)
if the war lasts two months, and an additional
$1.9 billion (8.7 per cent of 2024 GDP) if the war
lasts three months.
The fiscal position of the State of Palestine is
unsustainable, as evidenced by its public debt
before the current war.
Debt is now expected to
deteriorate owing to a potential halt/reduction
in revenues collected by Israel on behalf of and
transferred to the Palestinian Authority, which
constituted around 64 per cent of total revenues
in 2022. Meanwhile, the Palestinian Authority
has not been able to pay the full salaries of
public servants. The financial stability of the
State of Palestine will also be at much greater
risk because of the war. IMF had already warned
before the war that there were risks of banking
sector instability due to liquidity withdrawals,
lower fiscal spending, disruption of relations with
Israeli banks, and rising non-performing assets,
notably in real estate. The war is expected to
amplify loan default risks, putting considerable
pressure on the banking sector of Gaza and of
the rest of the occupied Palestinian territory, and
threatening financial stability.
58
The ongoing war raises the possibility of wider
regional and global repercussions.
Examining
possible regional and global consequences, the
current war has the potential to transmit its
impact through oil and gas prices, which have
seen moderate increases thus far. Further
escalation could lead to substantial price surges,
resulting in elevated production and transport
costs, and ultimately higher inflation. Regional
escalation may disrupt trade flows, especially
if it leads to port and border crossing closures.
Bloomberg has estimated a 1 per cent decline in
global GDP growth in the event of a widespread
regional war.
59
In addition, the war could compel
neighbouring countries to redirect resources from
development to security expenses. Investors
may also adopt a more cautious and risk-averse
approach, delaying investment decisions, in a
scenario of heightened volatility across major
asset classes in the region, and across the
commodities, tourism and real estate sectors.
Moreover, the war could negatively impact
neighbouring countries’ consumer confidence.
1 month mark
:
Palestinian
GDP
is expected to
As the war hits the
decline
by
4.2%
If the war extends to a
2
nd
month
:
the estimated
economic loss
would
rise
to
8.4%
of
GDP
If the war extends to a
3
rd
month
:
the estimated
economic loss
would
rise
to
12.2%
of
GDP
©UNDP
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14
6
Final remarks
In addition to the catastrophic loss of life, the current Gaza war and the full siege
by Israel continue to undermine the human security of the Palestinian people,
and have plunged the Gazan population into unprecedented deprivation and
multidimensional poverty, leading to a full-fledged humanitarian catastrophe.
The people of Gaza are not only facing physical destruction of homes and critical
infrastructure, but are also grappling with a loss of access to essential services,
including health care, water, energy, food, education, employment, income,
remittances, and basic rights and freedoms.
The United Nations Humanitarian Country Team in the State of Palestine is requesting
$1.2 billion to meet the immediate needs of 2.7 million people (the entire population
of Gaza and 500,000 people in the West Bank) by the end of 2023.
Gaza was already enduring the long-term effects of protracted occupation.
Consequently, although some of the systemic effects of the current war may
not be observed because they have already occurred (for example, capital
movements, restrictions on trade and limited movement of labour), the war will
only compound these challenges.
Addressing the repercussions of the war on the Palestinian economy, society
and human development will require unprecedented efforts. Some of the impact,
particularly on the lives of Palestinians, will be long-term, and social and economic
rehabilitation and recovery will be slow and challenging.
Even though the current war will have a prolonged impact on human capabilities
in Gaza for years to come, a swift ceasefire and sustained flow of humanitarian
assistance would produce a tangible immediate reduction in the deprivation
level for hundreds of thousands of Palestinian families.
It is crucial to handle the post-war phase differently from previous military
escalations. Post-war reconstruction and recovery efforts for Gaza should
learn from past mistakes, and should not be restricted to dealing with the
immediate humanitarian, social and economic needs resulting from wars and
military escalations.
©UNDP
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Endnotes
1.
2.
3.
According to the international poverty line of $6.85 per day (PPP).
PCBS data on Unemployment (Quarter 2,2023); World Bank, Economic Monitoring Report to the Ad Hoc Liaison Committee,
September 2022; Food Cluster Sector. Food Insecurity in Palestine, 2022; OCHA, Humanitarian Needs overview 2023.
OCHA figures on fatalities and injured are based on data from the Ministry of Health in Gaza, whereas those on infrastructure
damage are based on data from the Ministry of Public Works and Housing.
Ibid.
4. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 3 November 2023.
5.
6. According to the Annual Reports of the United Nations Secretary-General on Children and Armed Conflict, a total of 2,985 children
were killed across 24 countries in 2022. The death toll of children was 2,515 in 2021, and 2,674 in 2020 across 22 countries.
7.
OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 3 November 2023.
8. Ibid.
9. OCHA, Gaza: internally displaced persons, 11 April 2016.
10. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 3 November 2023.
11. Ibid.
12. Ibid.
13. OCHA, Hostilities in the Gaza Strip and Israel-reported impact, Day 24, 30 October 2023.
14. State of Palestine, Ministry of Health, Press release, 19 October 2023; OCHA, Hostilities in the Gaza Strip and Israel-reported
impact, Day 24, 30 October 2023.
15. UNRWA, Situation Report #6 on the Gaza Strip and the West Bank, 16 October 2023.
16. Palestinian Central Bureau of Statistics, PCBS highlights socio-economic indicators on the impact of the Israeli occupation war on
Gaza Strip, 16 October 2023.
17. UN News, Humanitarians call for urgent aid access to Gaza, 12 October 2023.
18. According to the initial health assessment by the UNRWA mobile medical team, over 37,000 IDPs have non-communicable
diseases requiring medical attention (UNRWA Situation Report #13).
19. Palestinian Central Bureau of Statistics, Press release highlighting that the children and women of Gaza Strip face an
unprecedented humanitarian disaster, 24 October 2023.
20. OCHA, Hostilities in the Gaza Strip and Israel, Reported Impact, Day 28, 3 November 2023.
21. UNICEF, Humanitarian Situation Report, No. 3 (20–26 October 2023); OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #17,
23 October 2023.
22. Arab Barometer Survey, Wave 5, 2018-2019.
23. Palestinian NGOs Network, Fact sheet: The reality of persons with disabilities in the Gaza Strip during Corona pandemic,
30 September 2020.
24. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 3 November 2023.
25. Ibid.
26. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #21, 27 October 2023.
27. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 3 November 2023.
28. Washington Post, Tracking damage within the Gaza Strip through maps, 1 November 2023.
29. The UNOSAT comprehensive damage assessment is conducted by human experts and may require additional time for thorough
analysis. As a result, the latest assessments for North Gaza, Gaza City and Khan Yunis are dated 15 October 2023. For Deir Al-
Balah and Rafah, they are dated 21 and 28 October 2023, respectively. It is possible that further damage has occurred since those
dates.
30. UNOSTAT, Nighttime Light Analysis Gaza Strip, Occupied Palestinian Territory, 18 October 2023.
31. OCHA, Hostilities in the Gaza Strip and Israel – reported impact, Day 29, 4 November 2023.
32. Rachel Wilson and others, Gaza’s limited water access, mapped, CNN, 18 October 2023.
33. OCHA, Hostilities in the Gaza Strip and Israel – Flash Update #29, 4 November 2023.
34. Maram Humaid, A year on from war, Gaza frustrated at slow reconstruction, Al-Jazeera, 10 May 2022.
35. The poverty rate in 2020 was estimated to be 61 per cent using national poverty lines, according to the World Bank, Economic
Monitoring Report to Ad Hoc Liaison Committee, 10 May 2022.
36. For more on the technical notes, see M. H. Bchir and others, DIVA: A CGE model for the study of African diversification, 2006; and
ESCWA and UNDP, A methodological note for assessing the socioeconomic impacts of the Gaza war, Technical document (available
upon request).
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16
37. Based on ESCWA CGE model simulations, according to available data as at 28 October 2023.
38. OCHA, Multi-sectoral needs assessment (MSNA): key sectoral findings – Gaza, July 2022.
39. According to the Gaza Market Monitoring Flash Update #2, Gaza’s estimated overall stocks of key food items are sufficient to
cover around 24 days for wheat flour, 19 days for sugar, 14 days for pulses, 13 days for rice and 7 days for vegetable oil. The report
also shows that more than 20 per cent of shops contacted in Gaza reported an increase in the level of prices in the first two days
of escalation, compared with 56 per cent on 14 October 2023.
40. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #18, 24 October 2023.
41. Abdel Hamid El Bilbeisi and others, Households’ food insecurity and their association with dietary intakes, nutrition-related
knowledge, attitudes and practices among under-five children in Gaza Strip, Palestine, Frontiers in Public Health, vol. 10, 2022.
42. OCHA, Hostilities in the Gaza Strip and Israel, Flash Update #28, 30 October 2023.
43. UN-Women, Facts and estimates: Women and girls during the conflict in Palestine, 2 November 2023.
44. MPI is a composite index that includes non-monetary dimensions of well-being such as health, education and living standards.
It is a product of the headcount ratio (the proportion of the multidimensionally poor population out of the total population) and
intensity of deprivation (average deprivation score experienced by people in multidimensional poverty).
45. The revised Arab MPI was conceived as a regional benchmarking tool to motivate member States to produce their national
measure that would be more suitable to reflect the sociocultural type of deprivations. It includes five dimensions: health,
education, housing, access to services and assets. The classification of multidimensional poverty is set at a deprivation score
of 20 per cent. In other words, households deprived in at least one dimension or more than one-fifth of all indicators will be
considered multidimensionally poor. The Palestinian national MPI consists of seven dimensions tailored to the particular context
of the State of Palestine. Six of these dimensions comprise the social well-being component and cover 21 indicators in education,
health, employment, housing conditions and access to services, safety and use of assets, and personal freedom. A seventh
dimension, monetary poverty, captures economic well-being using the national poverty line. For more information, see ESCWA,
Nowcasting the national multidimensional poverty index for the State of Palestine (2017–2022), 2023.
46. ESCWA, War on Gaza 2023: an unprecedented and devastating impact, October 2023.
47. UNDP, Human Development Report Indicators, State of Palestine Profile, 2022.
48. PCBS, Press Release on the Results of the Labour Force Survey, Second Quarter (April – June, 2022) Round.
49. UNDP, Lives versus livelihoods: the Covid-19 pandemic and labour markets in Arab States, 2021.
50. Based on PCBS, Palestine Labour Force Survey 2021 (accessed on 1 November 2023).
51. ILO, Impact of the Israel-Hamas conflict on the labour market and livelihoods in the occupied Palestinian territory, Brief No. 1;
Reuters, Israel reopens Gaza crossings, lets Palestinians back to work after two weeks, 28 September 2023; Gisha, Israel refuses
to reveal information about thousands of Gaza residents being held in Israeli detention facilities, 19 October 2023.
52 Various sources estimate that the number of workers expelled to the West Bank ranged between 5,000 and 6,000. As for the
recently released detained workers, the Israeli authorities have not yet revealed any information about them. Gisha, Israel
refuses to reveal information about thousands of Gaza residents being held in Israeli detention facilities (19 October 2023); Gisha,
Israeli cabinet decision to return Gaza workers to the Strip (3 November 2023).
53. El Pais, Israel returns thousands of Palestinian workers to Gaza as bombing continues, 3 November 2023. As of 2022, 153,000
Palestinians worked in Israel and Israeli settlements in the West Bank, and generated an income of around $3 billion per year,
which constituted about one quarter of the West Bank’s GDP according to a report by the United Nations Conference on Trade and
Development (UNCTAD).
54. ILO, Impact of the Israel-Hamas conflict on the labour market and livelihoods in the occupied Palestinian territory, Brief No. 1.
55. Some studies found that the impact on wages was much higher than that on employment. For example, a study found that
placing one checkpoint one minute away from a locality would significantly reduce its residents’ hourly wage by 5.2 percentage
points, and reduce their probability of being employed by 0.5 percentage points (Massimiliano Calì and Julia Oliver, West Bank
check-points damage economy, illustrate high cost of trade barriers, 18 July 2013).
56. ILO, Impact of the Israel-Hamas conflict on the labour market and livelihoods in the occupied Palestinian territory, Brief No. 1.
57. Hannes Mueller and Chanon Techasunthornwat, Conflict and poverty, World Bank working paper 9455, 2020.
58. IMF, West Bank and Gaza: Report to the ad hoc liaison committee, 8 September 2023.
59. Ziad Daoud and others, Wider war in Middle East could tip the world economy into recession, 13 October 2023.