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Gaza war: Expected socioeconomic
impacts on the State of Palestine
E/ESCWA/UNDP/2024/Policy brief.2
@Meeza/stock.adobe.com
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Executive summary
Gaza war
severe
impact on

education

healthcare

social services

economy

environment
One year into the Gaza war, the humanitarian crisis has reached a catastrophic
level, with unprecedented casualties, widespread destruction and severe food
insecurity. Mass displacement and a scarcity of safe spaces, coupled with
Israeli restrictions on aid delivery, have further compounded the crisis.
The war has had a severe impact on critical sectors such as education, healthcare,
social services, the economy and the environment. Educational institutions
have suffered significant losses, with numerous casualties among students and
educators and the widespread destruction of schools. The healthcare system is
nearing collapse, facing critical shortages in medical supplies and widespread
malnutrition, particularly among children. The provision of social services has
been severely curtailed, leaving most people to fend for themselves, while the
true impact of the war on the environment remains uncertain and will likely
take generations to fully address. Additionally, the escalations in the West
Bank including intensified Israeli military operations resulted in significant
casualties and destruction to infrastructure and economic losses.
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Economic projections indicate that the gross
domestic product (GDP) of the State of Palestine
contracted by 35.1 per cent in 2024 compared with
a no-war scenario, with unemployment potentially
rising to 49.9 per cent. By the end of 2024, the
Human Development Index (HDI) in the State of
Palestine may fall to 0.643, a level not seen since
HDI calculations began in 2004. The HDI of Gaza is
projected to drop to 0.408, erasing over 20 years
of progress. The HDI of the West Bank is expected
to decline to 0.676, reflecting a loss of 16 years of
development. The incursions into the West Bank
are likely to further worsen the HDI, especially in
a “significant incursions” scenario. Poverty in the
State of Palestine is projected to rise to 74.3 per cent
in 2024, affecting 4.1 million people, including
2.61 million people who are newly impoverished.
Incursions by Israel into the West Bank are expected
to further elevate the poverty rate, to 75.0 per cent
in the case of a limited incursion and 75.5 per cent
in the case of a significant incursion. The war has
also severely exacerbated multidimensional poverty,
with projections indicating that the Multidimensional
Poverty Index (MPI) for the State of Palestine will
rise sharply from the 10.2 per cent measured by a
household survey conducted in 2017 to an estimated
30.1 per cent in 2024. The most affected dimensions,
where all indicators have significantly worsened,
include housing conditions, access to services, and
safety. The greatest increases in deprivation rates
across MPI indicators are observed in freedom of
movement, monetary resources, unemployment,
access to healthcare and school enrolment. The
number of people living in multidimensional poverty
has more than doubled during this period, rising
from 24.1 per cent to 55.4 per cent at national level.
This report presents an analysis of three recovery
scenarios in the State of Palestine. Given that the
recovery will be a long-term process, we assess
both the immediate impact projected for 2025
and the long-term impact anticipated by 2034, a
decade after the start of the conflict. This dual
analysis provides a comprehensive understanding
of the potential pathways and challenges that
could shape the socioeconomic recovery of the
State of Palestine in the years to come.
1.
No early recovery (NER).
Under this scenario, a
strict ban on Palestinian workers persists, and
the withholding of “clearance revenues” to the
Palestinian Authority (PA) continues, worsening
the fiscal crisis. Aid remains unchanged, limiting
economic growth to 2 per cent. Under this
2
scenario, GDP is projected to fall by 20.1 per cent in
2025 and by 34 per cent by 2034 compared with
pre-war levels, with multidimensional poverty
remaining extremely high. Achieving a permanent
ceasefire is expected to decrease the already high
unemployment rate by approximately 3 percentage
points, allowing it to reach 55 per cent by 2034.
2.
Restricted early recovery (RER).
Under this
scenario, the ban on Palestinian workers
continues, and clearance revenues are still
withheld. While $280 million in humanitarian aid
addresses immediate needs, it does not support
long-term economic recovery. Under this scenario,
GDP is expected to decline by 19.6 per cent in
2025, with a 33 per cent drop by 2034. Poverty
will persist, with only minimal improvements.
The decrease in the unemployment rate under
this scenario is similar to the NER scenario. Over
the next decade, middle-class consumption is
expected to fall by 35 per cent.
3.
Non-restricted early recovery (NRER).
Under
this scenario, restrictions on Palestinian workers
are lifted, and withheld clearance revenues are
restored to the PA. In addition to $280 million
in humanitarian aid, $290 million is allocated
annually for recovery efforts. Productivity
increases by 1 per cent annually, enabling
the economy to recover and realign with its
development plan by 2034. This scenario predicts
significant improvements in poverty, with
more households gaining access to essential
services. The unemployment rate is expected
to fall significantly, to 26 per cent. Middle-class
consumption is expected to fall by 6 per cent.
Poverty in
the State of Palestine
74.3%
in 2024
4.1
million
including
2.61
million newly impoverished
 URU, Alm.del - 2024-25 - Bilag 37: Materiale fra briefing 22. oktober 2024 ved UNDP om situationen i de palæstinensiske områder
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All economic sectors are projected to suffer
significant declines, with the construction
sector experiencing declines of 70 per cent,
69 per cent, and 8 per cent in the NER, RER
and NRER scenarios respectively. Under the
NER and RER scenarios, output levels are likely
to fall over time unless urgent development
aid is provided. Stabilizing and revitalizing
productive sectors is crucial for ensuring
sustainable recovery and resilience in the
State of Palestine.
This analysis underscores the urgent need for
a multifaceted approach to recovery, including
humanitarian aid, recovery and reconstruction
programmes, improvements in the business
climate, and the release of the fiscal clearance
mechanism. The NER and RER scenarios
reveal the limitations of relying solely on
humanitarian aid for the economic recovery
of the State of Palestine. Even if $280 million
in aid were provided each year, the economy
would struggle to regain its pre-crisis level
within a decade. By contrast, a comprehensive
recovery and reconstruction plan, combining
humanitarian aid with a strategic investment
in recovery and reconstruction along with
lifting economic restrictions and promoting
recovery-enabling conditions, could help put
the Palestinian economy back on a restorative
track, aligning with the vision of rebuilding
Gaza and creating a foundation for a better
future over the next decade.
This is the third edition of the SEIA series,
a joint effort between the United Nations
Economic and Social Commission for Western
Asia (ESCWA) and the United Nations
Development Programme (UNDP), alongside
other institutions.
J
Context
One year has elapsed since the onset of
the Gaza war, and the situation continues
to deteriorate. Casualties, injuries and
to
humanitarian suffering continue to escalate,
with destruction reaching unprecedented
levels and famine threatening an increasing
proportion of the population. Mass
displacement and limited safe spaces,
coupled with Israeli restrictions on aid
delivery, have further compounded the crisis.
The severity of human suffering, particularly
among children, is at a historic high. Gaza
remains in a state of profound crisis, with no
viable resolution in sight.
At the same time, the West Bank has
experienced an intensification of violence
against Palestinians and their property and
infrastructure. This violence reached a new
high after Israel launched a large-scale military
operation in urban centres in the West Bank,
with a focus on refugee camps. The military
operation involved both air and ground
forces and resulted in significant numbers of
casualties and damage to infrastructure, at the
highest levels seen since the United Nations
started systematically recording information
on casualties and destruction in 2005.
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Section 1: The impact of the Gaza war on the
Palestinian people
injured, including 660 children.
5
The number of
casualties has increased sharply since 28 August
2024, when Israel launched a military operation
in the West Bank.
This escalation in violence has been
accompanied by widespread detentions, with
over 16,000 Palestinians being detained by
Israeli forces by 30 September 2024.
6
These
detentions have had a severe socioeconomic
impact on families, leading to income loss and
increased dependence on humanitarian aid.
The psychological toll of these events is also
profound, particularly for children
exposed to
violence and instability.
»
The humanitarian situation
As of September 2024, approximately 3,300,000
Palestinians (2.3 million in Gaza), including
1,554,700 children, were in urgent need of various
forms of humanitarian assistance.
1
Loss of life and human suffering
By 16 September 2024, at least 41,534 Palestinians
had been killed in Gaza, and 96,092 injured.
2
The
Palestinian Ministry of Health has published a
649-page document disclosing full details of
34,344 of the 40,738 people who were killed or
injured between 7 October 2023 and 31 August
2024. These include 11,355 children and 6,297
women.
3
Many of the injuries suffered by Gaza
residents will be life-changing: according to the
head of the United Nations Relief and Works
Agency for Palestine Refugees in the Near East
(UNRWA), “every day in Gaza, 10 children lose one
or both legs amid ongoing Israeli bombardment”.
4
In parallel, since 7 October 2023, the West
Bank has also experienced an escalation in
violence. Israeli military and security operations
in the West Bank have led to substantial
civilian casualties, the highest toll recorded
since at least 2009. By 30 September 2024,
700 Palestinians, including 160 children, had
been killed, and more than 5,750 had been
Displacement
With 86 per cent of Gaza subject to “evacuation
orders”, the 2.1 million Palestinians remaining
in Gaza are expected to seek shelter in only 13
per cent of the territory’s land area.
7
Up to 1.9
million people (90 per cent of the population)
have been internally displaced, many of them
repeatedly (some up to 10 times).
8
Since 7 October 2023, there has been an
increase in the number of Palestinian people
displaced in the West Bank. By 25 September
2024, more than 4,450 Palestinians, including
about 1,875 children, had been displaced as a
result of the destruction of their homes and
livelihoods, and 1,628 others had been displaced
in the context of incidents involving Israeli
settlers. This is more than three times higher
than the number of people displaced during the
same period before 7 October 2023.
9
Gaza
By 16 September 2024
Food insecurity and malnourishment
The food insecurity situation in Gaza is
catastrophic. By 25 June 2024, 96 per cent of
the population, or 2.15 million people, faced
acute food insecurity (Integrated Food Security
Phase Classification (IPC) phase 3 or above), with
495,000 people (22 per cent of the population)
10
experiencing catastrophic levels of food insecurity
(IPC phase 5) by September 2024.
11
41,534
Palestinians
had been killed
96,092
injured
4
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By 20 August 2024, according to the World
Health Organization (WHO), 165 patients had
been admitted to hospitals as a result of severe
acute malnutrition.
12
Since 7 October 2024, 34
people have died from malnutrition, most of them
children.
13
Hunger and malnutrition among mothers
and babies is hugely harmful to children’s survival,
growth and development. For months, there has
been a high risk of famine in the Gaza Strip in the
context of the ongoing war and the restriction of
humanitarian access.
Across Gaza, 93 per cent of children and 96
per cent of pregnant and breastfeeding women
are consuming fewer food groups daily, leading
to households skipping meals. As a result, the
need for nutrition support is becoming more
urgent.
14
Food shortages will also have significant
implications for maternal and child health. Food
assistance is insufficient to cover the needs of
all those affected, with limited availability of
commercial goods and high prices leading to poor
dietary variety. An assessment conducted by the
United Nations Children’s Fund (UNICEF) between 19
and 25 July 2024 found that Gaza City markets had
no vegetables or fruits as a result of transportation
challenges and high costs, exacerbated by the high
risk of fresh foods spoiling as a result of prolonged
transit periods of trucks at crossings.
15
A survey caried out by UN Women found that 99
per cent of households with pregnant women
were struggling to obtain nutritional products and
supplements; 78.4 per cent were unable to take
tests to assess their nutritional and health status.
16
Considering that the average household in Gaza
consisted of 5.5 persons in
2022,
21
and
the total
number of damaged housing units
was 135,142
by late
May 2024, it is estimated that 743,281
individuals will remain displaced after the war
ends. Experts have warned that such destruction
amounts to “domicide,” with “more housing and
civilian infrastructure has now been destroyed in
Gaza as a percentage, compared to any conflict
in memory”.
22
In May 2024, UNDP and ESCWA
estimated that rebuilding Gaza’s homes could
take until 2040.
23
Between October 2023 and July 2024, 67 per cent
of water and sanitation infrastructure and
facilities were damaged or destroyed.
24
This does
not take into account the irreparable damage
to groundwater quality caused by the release of
untreated wastewater and other pollutants, or
the health consequences of consuming unsafe
water or the lack of access to water for hygiene
and sanitation.
In the West Bank, Israeli settlement expansion
and military operations led to a marked increase
in the destruction of Palestinian infrastructure.
Between 7 October 2023 and 16 September 2024,
Israeli authorities demolished or confiscated
1,697 Palestinian structures across the West Bank,
including over 700 inhabited structures, more
than 300 agricultural structures, more than
100 water, sanitation and hygiene structures,
and 200 livelihood structures.
25
»
»
Human capital
Physical capital
Education
Education in Gaza is under attack, with experts
warning of an intentional effort to comprehensively
destroy the Palestinian education system, an
action known as “scholasticide”.
26
As a result,
625,000 students currently have no access to
education. By 25 September 2024, 10,317 students
and 416 educational staff had been killed in Gaza,
and over 19,119 students and 2,463 educational
staff had been injured.
27
By 31 July 2024, 92.9 per cent of school buildings
(524 schools) had sustained damage requiring
repairs or full reconstruction.
28
53.5 per cent of
schools primarily used as shelters have been
directly hit.
5
The war continues to seriously damage
infrastructure and resources that are necessary
for survival. By the third quarter of 2024, at
least 151,265 structures had been damaged.
17
Approximately 60 per cent of buildings and
57 per cent of agricultural land had been
damaged or destroyed, posing a significant
risk to the functioning of the food system.
18
The cost of repairing the direct damage to
Gaza’s infrastructure was estimated to be over
$18.5 billion,
19
equivalent to approximately 97
per cent of the combined GDP (of 2022) of the
West Bank and Gaza,
20
emphasizing the critical
need for comprehensive and unrestricted aid
for recovery.
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UNICEF has expressed concern that schools are
being used by Israeli armed forces as detention/
interrogation centres and military bases.
29
This
severe damage to the education infrastructure
of Gaza and significant losses in its human capital
pose a serious threat to future generations.
Schools will need to be reconstructed urgently,
affected students and staff will need to receive
psychological assistance to support them in the
process of recovering.
In the West Bank, including East Jerusalem,
by September 2024, 782,000 children were at
risk of losing their school year amid increased
attacks on schools and education. Between 8
and 20 per cent of schools were closed on any
given day since October 2023. Also, 58 schools
are subject to partial or full demolition orders.
30
Furthermore, face-to-face education in schools
was limited to two days per week from January
2024 to June 2024.
31
Even when schools are open, the fear of
violence, movement restrictions and mental
health concerns have led many students to skip
school, leading to more learning loss. By the end
of August 2024, there had been 69 attacks on
schools and 2,354 incidents of violence affecting
students and staff,
32
in which 67 students were
killed, 367 injured and 159 arrested, further
disrupting the education system.
33
Worsening economic conditions have exacerbated
this situation. A total of 29 per cent of Palestinian
households reported reducing education
expenditure, and 7 per cent had begun to send their
children to work instead of to school. Palestinian
teachers have also been significantly affected, with
6.2 months of salary unpaid since October 2023.
34
Health
The health sector has not been spared: by
25 September 2024, 986 health workers in Gaza
had been killed.
35
By 30 June 2024, 310 medical
staff from medical facilities across Gaza had
been taken into custody by the Israeli army.
36
By 22 July 2024, at least 492 attacks on
health infrastructure had been recorded by
WHO, affecting 109 health facilities, including
32 hospitals and 114 ambulances,
37
and by
25 September, only 57 out of 132 primary
healthcare centres (43 per cent) were partially
functional.
38
Infectious diseases are projected to be
the largest cause of excess death in Gaza,
including under the best-case scenario of an
early permanent ceasefire. Cholera, measles,
polio and meningococcal meningitis pose
the greatest threats. Even if the war ended
immediately, the time required to restore
functioning health services would still result in
thousands of excess deaths.
39
Lack of access
to clean drinking water and sanitation facilities
creates significant health risks for all, and can
exacerbate the situation.
Restrictions on medical imports and aids
have only worsened the situation. Stocks of
medicines and medical items are very low,
with up to 60 per cent of medicines either fully
depleted or available in very low quantities.
40
Women and girls tend to be disproportionately
affected by limited access to healthcare.
In Gaza, more than 500,000 women of
reproductive age have no access to essential
services including antenatal care, postnatal
care, family planning and management of
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sexually transmitted infections,
41
making
them increasingly vulnerable to serious and
life-threatening health complications during
and after pregnancy and birth. Furthermore,
women reportedly suffer from higher rates of
diabetes than men and were twice as likely to
suffer from hypertension.
42
For those with chronic diseases and the most
severely injured, medical evacuation is almost
non-existent. Vaccination coverage in Gaza
has now dropped to 86 per cent as a result
of the “decimation of the health system, lack
of security, destruction of infrastructure,
mass displacement and shortage of
medical supplies”,
43
with a resurgence of
communicable diseases that were once
unusual, such as polio and hepatitis A.
44
In the West Bank, fragmentation of territory
and discriminatory zoning and planning policies
and procedures implemented by Israel have a
harmful effect on the delivery of healthcare,
particularly for more vulnerable communities.
WHO documented more than 600 attacks on
healthcare in the West Bank by Israeli security
forces or settlers between 7 October 2023 and
18 September 2024, in which 25 people were
killed, 109 injured, and 56 health facilities and
427 ambulances damaged.
45
»
Environment
Five of the six solid waste management
facilities in Gaza are damaged. By April 2024,
over 270,000 tons of solid waste remained
uncollected across the territory.
46
Families
are now burning garbage, wood and plastic
as a result of a lack of cooking gas, which
has made air quality in Gaza worse. Fires and
burning fuel stores caused by the war have
exacerbated the situation further. As a result of
the closure of the five wastewater treatment
facilities in Gaza, sewage has contaminated
beaches, coastal aquifers and sources of fresh
water. Soil has been polluted with a variety
of contaminants including microplastics and
dangerous chemicals. Sewage contamination
poses short and long-term risks to the health of
Palestinians in Gaza, marine life, groundwater
and arable land.
47
The exact amount and types of toxins
affecting the environment in Gaza have yet
to be identified. However, people are already
suffering from pollution and the effects
of war-related damage to environmental
management systems. Sanitation and water
supplies have collapsed. Damage continues to
be caused to essential infrastructure. Coastal
areas, soil and ecosystems have been severely
affected. Munitions containing heavy metals
and explosive chemicals deployed in Gaza are
contaminating soil and water and posing health
risks, particularly to children, and will continue
to do so long after the hostilities have ended.
48
The war has generated 42 million tons of
debris, posing significant risks to human
health and the ecosystem. Proper protocols
must be followed when handling human
remains buried beneath debris, unexploded
ordnance, hazardous substances and various
types of waste. The destruction of solar
panels is also expected to release lead and
other heavy metals, posing a further risk to
Gaza’s soil and water.
49
Additionally, recent research has estimated
that the emissions from the first 60 days of the
7
The West Bank
+600
attacks on healthcare
between 7 October 2023
and 18 September 2024




25
people were killed
109
injured
56
health facilities destroyed
427
ambulances damaged
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war exceed the emissions from 20 individual
countries and territories.
50
Now, after a year of
war, the wider environmental damage caused
by greenhouse gas emissions is notable.
»
Financial sector
The financial sector in Gaza is also facing severe
challenges. The value of the Gaza banking
portfolio is around $1 billion, and the territory’s
microfinance sector is worth around $54 million.
The Palestine Monetary Authority (PMA) has
implemented a loan moratorium until September
2024, though the impact on capital adequacy
and liquidity has been significant. Direct losses
experienced by financial sector facilities in Gaza
are estimated at over $14 million, in addition to
the overall impact of the worsening economic
conditions on the banking portfolio.
51
There
are also concerns about the recovery of cash
available in Gaza before the war. To address
cash shortages, the PMA introduced cost-free
instant payments, offline United States dollar
transaction capabilities, and electronic Know
Your Customer procedures in May 2024,
52
but
liquidity issues and access to financial services
persist. The banking system’s exposure to the
public sector remains high, exceeding $2.5 billion
in July 2024. The rising percentage of returned
cheques – reaching 9 per cent of the value of all
cheques
53
in the first quarter of 2024, and up to
25 per cent in some cases – indicates a growing
macrofinancial risk profile.
54
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Section 2: Estimation of the economic
impact of the war
Third, it is projected that the Government of the
State of Palestine will collect only 50 per cent of
its fiscal clearance revenue in 2024 as a result of
changes in the fiscal clearance mechanism. Fourth,
the movement of labour between the occupied
Palestinian territory and Israel, halted during the
war, is expected to partially resume after the war,
despite efforts by Israel to substitute Palestinian
workers with labour from other countries. Fifth, two
scenarios are simulated to estimate the economic
impacts of incursions in the West Bank. The first
assumes a limited incursion affecting Jenin, Tubas
and Tulkarem, which represent around 23 per cent
of the West Bank’s economic activity (table 1). The
second scenario involves a larger incursion reaching
Nablus and Qalqiliya a region that represents an
additional 20 per cent of economic activities in the
West Bank, further expanding the affected area.
Both incursions are expected to reduce economic
activity by 40 per cent in the affected areas.
These projections suggest that the real GDP of the
State of Palestine will decline by 8.7 per cent in
2023 (equivalent to $1.7 billion) and by 35.1 per cent
in 2024 (equivalent to $7.1 billion) compared with a
no-war scenario,
56
indicating a profound contraction
in economic activity (table 2). This decline reflects
widespread disruption to all sectors of the economy,
severely hampering production, investment and
Assuming a ceasefire after 12 months of war, the
economic and social situation is evaluated using
a Computable General Equilibrium (CGE) model
calibrated with the 2018 Palestinian Social Accounting
Matrix (SAM), alongside a poverty simulator and
an HDI simulator. While the use of a CGE model
comes with certain limitations and uncertainties,
its ability to integrate complex interactions
between productive sectors, private and public
demand, and fiscal policy enables it to effectively
capture the primary mechanisms through which
the war impacts the Palestinian economy.
»
Macroeconomic impacts
Like in previous versions of this report,
55
the
potential outcomes of the ongoing war are based
on four key hypotheses derived from developments
observed since the start of the war. First, the decline
in economic activity in Gaza and the West Bank
is expected to lead to a decrease in total factor
productivity, with the decline continuing during the
war. Second, it is assumed that 60 per cent of the
productive capital of Gaza was lost in 2023, with
further destruction expected if the war continues.
Reducing productive capacity each additional month
beyond three months could result in the destruction
of 1.6 per cent of Gaza’s remaining capital stock.
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Table 1.
Number of establishments in the State of Palestine by governorate, 2017
Governorate name
Jenin
Tubas and Northern Valleys
Tulkarm
Nablus
Qalqilya
Salfit
Ramallah and Al-Bireh
Jericho and the Valleys
Jerusalem
Bethlehem
Hebron
North Gaza
Gaza
Deir al-Balah
Khan Younis
Rafah
Total
Source:
PBS: Enterprise survey 2017.
Number of establishments
Percentage
13,729
1,965
7,953
17,113
4,409
2,986
15,850
1,509
5,559
9,031
23,716
8,670
19,449
6,748
9,062
6,173
153,922
13
2
8
16
4
3
15
1
5
9
23
13
2
8
16
4
100
overall economic stability. The 40-day incursion into
the West Bank is projected to cause an additional
0.7 per cent decline in GDP if military operations do
not affect Tulkarm and Nablus, and an additional 0.5
per cent decline in GDP for 2024 if they do, bringing
the total GDP contraction to 36.3 per cent.
Capital destruction, economic contraction and
reductions in population movement will lead
to a dramatic increase in unemployment. The
unemployment rate in the occupied Palestinian
territory is expected to more than double, rising
from 25.7 per cent in 2022 to 36.5 per cent in 2023
and 49.9 per cent in 2024, suggesting a significant
increase in joblessness. This surge in unemployment
will exacerbate already difficult socioeconomic
conditions, leading to higher poverty rates and
increased strain on social services.
Israeli military operations in the West Bank are
expected to increase the unemployment rate by
an additional 0.4 percentage points, bringing the
total to 50.3 per cent. This decline is mirrored across
all household income groups, indicating widespread
economic distress. Household consumption
could be 16.4 per cent lower in 2023 than under a
no-war scenario, and 37 per cent lower in 2024. The
consumption of the poorest households is expected
to drop by 9.3 per cent in 2023 and 13.7 per cent
in 2024, while median households will see a much
sharper decline, from 18.3 per cent to 41.4 per cent.
Even the richest households are not spared, with
their consumption projected to decrease by 17.2
per cent in 2023 and 40.5 per cent in 2024. The
incursion in the West Bank is expected to further
deteriorate the economic situation, causing an
additional 0.5 per cent decline in overall local
consumption, leading to a total reduction of 37.5
per cent. This impact varies across income groups,
with middle-income and wealthier households
facing further reductions of 0.6 per cent and 0.8
per cent respectively, resulting in total consumption
drops of 42 per cent and 41.3 per cent. In contrast,
the poorest households are affected by the same
percentage decline across all scenarios (table 2).
The GDP of the West Bank contracted by
19 per cent during the last quarter of 2023,
reversing earlier economic growth. This has
been attributed to increased trade restrictions,
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violence and infrastructure damage.
57
By early
2024, unemployment in the West Bank had soared
to 32 per cent, with approximately 306,000 jobs
lost during the period.
58
This has been further
exacerbated by the cancellation of permits to enter
and work in Israel and East Jerusalem, depriving
many families of their incomes. As a consequence,
daily income losses have reached an estimated
$25.5 million, reflecting the sharp decline in
economic activity.
59
The economic contraction and the loss of job
opportunities have led to a significant reduction
in households’ consumption, which was 16.4
per cent lower in 2023 than it would have been in
a no-war scenario, and 37 per cent lower in 2024.
This decline is mirrored across all household
income groups, indicating widespread economic
distress. The consumption of the poorest
households is expected to drop by 9.3 per cent
in 2023 and 13.7 per cent in 2024, while median
households will experience a much sharper
decline, from 18.3 per cent to 41.4 per cent. Even
the richest households are not spared, with
their consumption projected to decrease by 17.2
per cent in 2023 and 40.5 per cent in 2024.
60
Table 2.
Impact on main macroeconomic variables, 2023–2024 (Percentage)
2023
The Gaza war
Gaza war+ limited
incursion into
the West Bank
-35.8
50.1
-37.3
Gaza war
significant
incursion into
the West Bank
-36.3
50.3
-37.5
©лев шалаги�½/stock.adobe.com
Real GDP (relative variation
to the baseline)
Unemployment rate (level)
Local consumption
(relative variation to the
baseline)
Poorest households’
consumption (relative
variation to the baseline)
Median households’
consumption (relative
variation to the baseline)
Richest households’
consumption (relative
variation to the baseline)
-8.7
36.5
-16.4
-35.1
49.9
-37.0
-9.3
-13.7
-13.7
-13.7
-18.3
-41.4
-41.8
-42.0
-17.2
-40.5
-41.0
-41.3
Source:
Estimates based on the CGE model simulations by ESCWA and calculations by UNDP economists. Estimates are subject to
change once more data become available.
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These figures underscore the widespread
and deepening economic hardships faced
by all segments of the population, with
middle-income households experiencing
the most significant relative decline
in consumption. Sharp reductions in
consumption across the board highlight
the loss of purchasing power and
deteriorating living standards, further
entrenching economic disparities and
social inequalities.
associated number of poor people, are
highlighted in figure 1.
Based on the latest nationally representative
data from the pre-war 2023 Palestinian
Expenditure and Consumption Survey, the
poverty rate in Gaza was 63.7 per cent.
61
The
most recent official pre-war estimate of
multidimensional poverty was 45.1 per cent in
2017. As a result of the destruction of social
and economic infrastructure, the MPI
62
and the
number of people living in multidimensional
poverty are expected to more than double
(table 3). Even if the poverty cut-off is
raised from 1/3 to 1/2 (where an individual
is considered to be living in poverty if they
experience deprivations in at least half of
the 22 weighted indicators), the poverty
figures are still high. The results presented
below are estimates for a post-war scenario,
assuming the cessation of hostilities and
direct occupation in Gaza. The ongoing war
has severely reduced economic activity,
resulting in widespread poverty which affects
various aspects of people’s lives. This includes
access to utilities, housing conditions, and
opportunities for health and education. A
noticeable difference can be observed when
comparing the indicator-specific deprivation
rates from 2017 with the projected estimates
for an immediate post-war scenario (table 3).
»
Impact on poverty
As a result of the war, primary poverty
metrics are expected to rise significantly.
Using the international poverty line, which
is suitable for estimating poverty in high
income countries (i.e. $6.85 PPP per capita
per day), the incidence of poverty in the
State of Palestine is estimated to reach 74.3
per cent in 2024, up from 38.8 per cent at
the end of 2023, bringing the total number of
poor people to 4.1 million. Of these, 2.61 million
people are newly poor. A limited incursion
and a significant incursion to the West Bank,
are expected to raise the poverty rate to
75.0 per cent and 75.5 per cent respectively.
The poverty rate across the three scenarios
of the scope of the war, together with the
Figure 1. Impact
on money metric poverty
4.50
4.00
3.50
Number (million)
3.00
2.50
2.00
1.50
1.00
0.50
-
0.66 0.66
Baseline
(After 3 months of war)
Number of people living in poverty
Gaza war
2.13
38.80
1.95
2.61
4.08
4.12
4.15
60.00
50.00
2.65
1.99
2.01
2.67
40.00
30.00
20.00
10.00
-
Limited incursion into the Significant incursion into the
West Bank
West Bank
Number of people newly living in poverty
Poverty rate
Cumulative number of people newly living in poverty (after war)
Source:
ESCWA analysis based on the level of poverty according to the international poverty line of $6.85 (2017 PPP per capita per day).
11
Poverty rate (percentage)
74.30
75.00
75.50
80.00
70.00
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Table 3.
Main poverty metric (Gaza pre-war, post-war)
Poverty statistics
Proportion of
population living in
poverty
Poverty intensity
b
MPI
Baseline
2016–2017
(Poverty cut-off 1/3)
45.1%
43.3%
19.5%
Aftermath
of 2023–2024 war
(Poverty cut-off 1/3)
a
97.9%
60.6%
59.3%
Aftermath
of 2023–2024 war
(Poverty cut-off 1/2)
82.8%
63.6%
52.6%
Indicator-specific deprivation rates (proportion of Gaza population who are deprived in each indicator)
Dimensions
Indicators
c
Ventilation problems in
dwelling
Housing conditions and
access to services
Overcrowding
Frequency of water and
electricity supply
Access to piped water
Employment
Unemployment
Theft or damage to
property
Safety and use of
assets
Ownership and use of
assets
Interpersonal and State
violence
Personal freedom
Freedom of movement
Chronic disease
Health
Disability
Health access
Education
Monetary resources
(Social expenditure)
School enrolment
Monetary poverty
2016–2017
39.10%
42.11%
31.77%
3.32%
15.57%
10.68%
1.82%
63.16%
8.90%
10.39%
18.97%
1.13%
13.87%
53.00%
2023–2024
80%
80%
95%
75%
80%
70%
80%
70%
60%
12%
30%
70%
70%
90%
Note:
Regarding income poverty, 90 per cent is used instead of 100 per cent because it is assumed that some citizens will still have access
to money, and that their expenditure will either match or exceed the daily poverty threshold once the war stops. Using the latest macro-
level measurements of the war’s impact on various sectors, as outlined in previous sections, estimates have been made of the specific
deprivation shocks for certain MPI indicators – particularly those directly affected by the war. These include the cessation of services, asset
damage, job and income loss, service interruptions, harm to individuals, and threats to freedom of movement and safety. The results of
this measurement are likely to underestimate the multidimensional deprivations experienced, as the normative assumptions of the MPI,
established in 2017, focused on access to needs rather than the quality of services.
a
A person is identified as “multidimensionally poor” if he or she is deprived in 33 per cent of the weighted indicators and is identified as in
“severe multidimensional poverty” if he or she is deprived in 50 per cent of indicators.
b
The intensity of poverty is the average percentage of indicators (out of a total of 22) in which multidimensionally poor people are deprived.
c
For a detailed definition of each MPI-defined indicator in the State of Palestine, please refer to the following study: https://www.mppn.org/
multidimensional-poverty-profile-in-palestine/.
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As clearly outlined in earlier sections, the
current spread of war to other geographical
areas in the occupied Palestinian territory,
specifically the West Bank, has significantly
affected multidimensional poverty. In
the absence of an updated survey, the
indicator-specific shocks have been estimated
at the aggregate level for the West Bank.
Table 4.
Main poverty metric (State of Palestine pre-war, post-war)
Poverty statistics
Baseline
2016–2017
(Poverty cut-off 1/3)
24.1%
42.4%
10.2%
Aftermath
of 2023–2024 war
(Poverty cut-off 1/3)
a
55.4%
54.4%
30.1%
Aftermath
of 2023–2024 war
(Poverty cut-off 1/2)
33.7%
63.2%
21.31%
Proportion of population
living in poverty
Poverty intensity
b
MPI
Indicator-specific deprivation rates (proportion of Gaza population who are deprived in each indicator)
Dimensions
Indicators
c
2016–2017
2023–2024
Ventilation problems in
dwelling
Housing conditions and
access to services
Overcrowding
Frequency of water and
electricity supply
Access to piped water
Employment
Unemployment
Theft or damage to
property
Safety and use of assets
Ownership and use of
assets
Interpersonal and State
violence
Personal freedom
Freedom of movement
Chronic disease
Health
Disability
Health access
Education
Monetary resources
(social expenditure)
a
34.77%
2.97%
15.48%
5.22%
11.07%
8.85%
2.97%
36.48%
7.50%
9.85%
14.25%
2.72%
13.36%
29.26%
49.37%
36.25%
39.76%
33.08%
52.73%
34.50%
36.25%
38.88%
38.79%
10.53%
18.43%
29.53%
35.16%
59.23%
School enrolment
Monetary poverty
A person is identified as “multidimensionally poor” if he or she is deprived in 33 per cent of the weighted indicators and is identified as in
“severe multidimensional poverty” if he or she is deprived in 50 per cent of indicators.
b
The intensity of poverty is the average percentage of indicators (out of a total of 22) in which multidimensionally poor people are deprived.
c
For a detailed definition of each MPI-defined indicator in the State of Palestine, please refer to the following study: https://www.mppn.org/
multidimensional-poverty-profile-in-palestine/.
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The current war has led to a marked
increase in deprivation rates across various
dimensions. Personal freedom has declined
significantly as a result of the rise in the
number of checkpoints, while safety has
been compromised by the loss of land and
homes through confiscation or demolition
in 2024.
63
While the situation in the West Bank has
not escalated into a full-scale war, it is
estimated that the number of people living in
multidimensional poverty has nearly tripled
from 2017 to 2024, rising from 10.2 per cent
to 30.1 per cent.
Across the entire occupied Palestinian
territory, the war has driven the number of
people living in multidimensional poverty
up to 55 per cent. The dimensions most
affected – where all indicators have
significantly worsened – include housing
conditions and access to services, as well as
safety. Among the indicators, the greatest
increases in deprivation rates are seen in
freedom of movement, monetary resources,
unemployment, access to healthcare and
school enrolment (table 4).
Multidimensional
poverty
10.2%
 to 
30.1%
in 2017
affecting

freedom of movement

monetary resources

unemployment

access to healthcare

school enrolment
in 2024
»
Impact on the Human
Development Index
Using Human Development Report Office
(HDRO) data for the period up to 2022,
we projected HDI values for the State
of Palestine for 2023 and 2024 under
Figure 2. Impact
on HDI
0
0.800
HDI values and HDI loss in 2023
0.700
0.600
0.500
0.400
0.300
0.200
0.100
0.000
"No-war" projections
9% 13.0%
"Continued war" projections
Limited incursion
into the West Bank
HDI loss 2024
Significant incursion
into the West Bank
13.2%
0.5
0.716 0.725 0.740
0.657 0.643
0.642
1
1.5
2
2.5
3
3.5
4
13.3%
0.641
4.5
13.4%
13.3%
HDI loss in 2024
13.3%
13.2%
13.2%
13.1%
13.1%
13.0%
2022
2023
2024
HDI loss 2023
Source:
ESCWA/UNDP simulation based on data from the human development report. https://hdr.undp.org/data-center.
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Figure 3. HDI
values in the West Bank and Gaza
0.800
0.700
0.600
0.500
0.400
0.300
0.200
0.100
0.000
No war
(Gaza)
Continued war
(Gaza)
No war
(West Bank)
Continued war
(West Bank)
Limited incursion
into the West Bank
Significant
incursion
into the West Bank
0.408
0.706 0.716 0.730
0.706
0.623
0.720 0.730 0.745
0.7200.700
0.676
0.720 0.700
0.676
0.7200.700
0.673
2022
2023
2024
Source:
ESCWA/UNDP simulation based on data from the human development report. https://hdr.undp.org/data-center. and data retrieved
from the Subnational HDI Database of the Global Data Lab. https://globaldatalab.org/shdi/, version 7.0. Aggregated data for the West Bank
and Gaza are population weighted.
two scenarios: “no war” (baseline) and
“continued war”. Furthermore, as in the
previous section, we have included two
additional scenarios to reflect the impact
of the incursion into the West Bank. In the
“no-war” scenario, HDI was expected to grow
following pre-COVID trends. In the “continued
war” scenario, life expectancy, schooling and
per capita gross national income (GNI) were
all projected to decline significantly. By 2024,
the HDI in the “continued war” scenario was
projected to fall to 0.643, 13 per cent less
than under the “no-war” scenario, reaching
levels not seen since HDI calculations began
in 2004 (figure 2).
64
The incursion into the
West Bank is projected to have further
negative effects on the HDI, lowering it to
0.642 in the “limited incursion” scenario and
0.641 in the “significant incursion” scenario
(figure 2). In Gaza, the HDI was projected
to fall to 0.408 by 2024, reaching levels
never observed since HDI calculations began
in 2004,
65
while in the West Bank, it was
projected to fall to 0.676, a loss of 16 years
of development (figure 3).
66
The incursion
into the West Bank is expected to have a
further negative impact on the region’s HDI,
particularly in the “significant incursion”
scenario, as shown in figure 3.
©Alla/stock.adobe.com
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J
Section 3: Estimation of prospects for
early recovery
“Restricted early recovery” scenario (RER):
The ban on Palestinian workers entering Israel
remains, limiting employment opportunities
and income sources for many families.
Clearance revenues continue to be withheld,
straining the financial capacity of the PA.
An annual humanitarian aid package of
$280 million is provided. This aid addresses
immediate humanitarian needs, including food,
healthcare and basic services, but falls short
of supporting broader economic recovery and
development. There is no improvement in the
business climate.
“Non-restricted early recovery” scenario (NRER):
In this scenario, restrictions on the movement of
Palestinian workers are lifted, allowing thousands
to seek employment in Israel, thereby improving
household incomes. The clearance mechanism
is restored, and previously withheld funds are
transferred to the PA, providing a much-needed
fiscal boost. In addition to the $280 million of
humanitarian aid simulated in the RER scenario,
additional support to the value of $290 million
is provided annually to support longer-term
To assess the possible prospects for recovery, we
have made estimations based on three scenarios.
Under the first scenario, no international support
is available, and there is no improvement in the
fiscal, trade and business climate. Under the
second scenario, only humanitarian support is
forthcoming; there is no improvement in the
fiscal, trade and business climate. Under the third
scenario, international support is made available
in sufficient quantities for humanitarian and early
recovery, and there are significant improvements
in the fiscal, trade and business climate.
“No early recovery” scenario (NER):
Israel
continues to enforce a strict ban on Palestinian
workers entering its territory. The funds that
Israel transfers each month to the PA, known
as “clearance revenues”, continue to be
withheld,
67
exacerbating the PA’s fiscal crisis.
Aid remains at current levels. The business
climate remains stagnant, and the Palestinian
economy will not recover at a better rate than
its long-term productivity pattern, estimated
by the International Monetary Fund (IMF) to be
2 per cent.
Figure 4. Impact
on the real GDP growth 2023–2034 (Variation compared with the “no-war” scenario)
5
0
-5
-10
-15
-20
-25
-30
-35
-40
NER
RER
NRER
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Source:
Estimates based on CGE model simulations by ESCWA, and calculations by UNDP economists. Estimates are subject to change once
more data become available.
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Figure 5. Projected
real GDP in billions of dollars
30
25
6.6
20
5.1
15
10
5
0
0.0 0.0
2022
0.0 0.0
2023
0.0 0.0
2024
0.10
2025
0.10
2026
0.10
2027
0.10
2028
0.10
2029
0.10
2030
0.10
2031
0.10
2032
0.10
2033
0.10
2034
2.8
3.3
3.9
2.3
4.4
5.8
7.4
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
8.4
Variation between
NRER and NER
in US$ billion
Variation between
RER and NER
in US$ billion
No war scenario
NRER
RER
NER
Source:
Estimates based on CGE model simulations by ESCWA, and calculations by UNDP economists. Estimates are subject to change once
more data become available.
recovery and development projects. The business
climate improves significantly; productivity
begins to increase by 1 per cent per year,
reflecting steady positive change.
Simulations show that a permanent ceasefire
will have a positive impact on the Palestinian
economy in all cases, even in the absence of
additional measures. However, in nearly all
scenarios, the extensive damage caused by
the war means that real GDP is expected to
remain below levels projected before the war
for at least the next decade (figure 4). The
long-term economic setbacks inflicted by the
war will require substantial recovery efforts and
sustained economic interventions to overcome.
After experiencing a significant decline in GDP of
35.05 per cent in 2024, the projected GDP changes
for 2025, following a permanent ceasefire, are
expected to be -20.1 per cent, -19.6 per cent
and -8.8 per cent under the NER, RER and NRER
scenarios respectively (figure 4).
In the long term, GDP is expected to worsen
annually under the NER and RER scenarios.
By 2034, GDP is projected to decrease by 34
per cent and 33 per cent respectively compared
with pre-war levels. Limiting humanitarian aid
will have minimal impact, as it contributes only
0.4 per cent to GDP per year. Most products
will be imported, and there will be a negligible
spillover effect of 0.33 per cent. A true
recovery for the Palestinian economy requires
a blend of humanitarian aid, reconstruction
programmes, improvements in the business
climate and the release of the fiscal clearance
mechanism. The NRER scenario, on the other
hand, is projected to gradually close the GDP
gap with the no-war scenario. Under these
conditions, the Palestinian economy could
recover by 2034. This analysis underscores a
crucial point: relying solely on humanitarian
aid is insufficient to catalyse the economic
recovery of the State of Palestine. This point
is illustrated by the “RER” scenario, where
humanitarian assistance focuses exclusively on
household consumption, resulting in marginal
to negligible economic benefits. Conversely, in
the “NRER” scenario, which includes aid directed
towards infrastructure investments essential
for long-term development and economic
revitalization, the dynamics are markedly
different. Here, significant improvements are
anticipated, including growth in real GDP, which
is indispensable for achieving sustainable
economic recovery in the long term (figure 5).
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Stopping the Gaza war alone is expected to
decrease the unemployment rate in the State
of Palestine by approximately 3 percentage
points (figure 6). However, without
eliminating all restrictions on workers’
movements and streamlining clearance
mechanisms, the unemployment rate is
projected to remain high, reaching 55 per cent
by 2034. In contrast, the NRER scenario which
includes these crucial changes could lead to a
significant reduction of 29 percentage points
in the unemployment rate, lowering it to 26
per cent across all Palestinian territory.
Regarding the long-term impacts on real
household consumption, all household
categories are projected to experience
negative effects under all scenarios (figure 7).
Both the NER and RER scenarios are likely
to involve substantial declines in household
consumption. The middle class is expected
to be the most severely affected, with a
significant proportion of people falling into
poverty. Over the next decade, the net
cumulative impact on the real consumption
of the middle class is estimated to be a
reduction of 36 per cent, 35 per cent and
6 per cent in the NER, RER and NRER scenarios
respectively.
Even a decade after the cessation of
hostilities, the real consumption levels of both
the middle class and the wealthiest households
are expected to remain significantly affected.
However, resuming workforce mobility and
improving clearance mechanisms, as well
as providing humanitarian aid and investing
in infrastructure development, are likely to
mitigate the decline in real consumption.
©Dave Marzotto/stock.adobe.com
Figure 6. Labour
market impact 2023–2034 (Percentage points)
60
50
40
30
20
10
0
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Unemployment rate in NER scenario
Unemployment rate in RER scenario
Unemployment rate in NRER scenario
Source:
Estimates based on CGE model simulations by ESCWA, and calculations by UNDP economists. Estimates are subject to change once
more data become available.
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These actions are crucial for stabilizing and
eventually improving economic conditions for
all household categories.
The output of all economic sectors is
projected to be severely impaired (figure 8).
The construction sector is expected to face
the steepest decline, with reductions of 70
per cent, 69 per cent and 8 per cent in the
NER, RER and NRER scenarios respectively.
The NER and RER scenarios are characterized
by significant declines in output levels, with
the situation expected to deteriorate further
over time. Without urgent intervention in the
form of development aid, sectoral production
is likely to worsen year by year, exacerbating
economic challenges and hindering recovery
efforts. Development aid is essential to stabilize
and eventually revitalize these critical sectors,
ensuring sustainable growth and development.
Figure 7. Cumulative
impacts on real household consumption 2023–2034 (Variation in per cent)
NER
5
0
-5
-10
-15
-20
-25
-30
-35
-40
Poorest
Median
Richest
RER
NRER
Source:
Estimates based on CGE model simulations by ESCWA, and calculations from UNDP economists. Estimates are subject to change
once more data become available.
Figure 8. Cumulative
sectoral impacts 2023–2034 (Variation in percentage)
Accommodation and
food service activities
Human health and
social work activities
Agriculture, forestry
and fishing
Manufacturing
Construction
Information and
communication
services
Transportation
and storage
Real estate
activities
0
-10
-20
-30
-40
-50
-60
-70
-80
NER
RER
NRER
Source:
Estimates based on CGE model simulations by ESCWA, and calculations by UNDP economists. Estimates are subject to change once
more data become available.
19
Education
Public administration
and defence
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Section 4: Moving forward:
early recovery scenarios
Union and the United Nations) to devise a
plan for recovery and reconstruction. As
part of this work, a Rapid Damage and Needs
Assessment is being planned, and a Conflict
Recovery Framework is being created. These
efforts will guide the PA in implementing
its own recovery, reconstruction, and
development plan for Gaza, ensuring a
coherent, Palestinian-led approach to
addressing evolving needs and challenges in
the occupied Palestinian territory.
While these processes are underway, the UNCT
and HCT have developed a joint approach for early
recovery that bridges urgent humanitarian needs
and longer-term recovery and reconstruction.
This approach can be implemented if conditions
on the ground permit, even before a formal
ceasefire.
68
This approach to early recovery
emphasizes alignment with PA recovery
planning, local engagement, capacity-building
and inclusivity, aiming to reduce dependency
on aid and promote resilient, self-sustaining
communities. The aim of recovery should be
to rebuild Gaza – not only restoring what has
been lost, but also creating a foundation for a
better future. The all-of-Palestine approach is a
key principle, ensuring that recovery initiatives
in Gaza are linked with those in the West
Bank, using regional resources and expertise.
This principle will ensure that both areas are
comprehensively addressed, and that the distinct
needs of different genders, communities and
geographic locations are taken into account,
in addition to promoting empowerment and
equitable access to resources.
While some limited early recovery activities are
already underway, fully scaling up a recovery
and reconstruction process cannot occur
without a cessation of hostilities and the
creation of an enabling environment. Reaching
an agreement for an immediate ceasefire
leading to a lasting sustainable one is an urgent
and critical first step. And for recovery to lead
to durable and lasting outcomes, achieving a
just and enduring peace is critical. As the United
Nations Secretary-General has stated, “[t]he
right of the Palestinian people to build their own
After 12 months of continuous war in Gaza, the
situation remains critical, with widespread
destruction, unprecedented humanitarian
suffering and severe economic collapse. The
war has inflicted immense damage on the
region’s infrastructure, education, health
and the environment, leaving the population
in a state of profound crisis. The economic
impact has been significant, with a projected
35.1 per cent decline in GDP for 2024, high
unemployment rates, and the near-total
collapse of essential services.
Coordinated planning efforts in the occupied
Palestinian territory have focused on aligning
humanitarian and early recovery initiatives,
ensuring they complement the recovery
strategies of the PA. The planning carried out
by the PA focuses on life-saving measures,
infrastructure rehabilitation, and restoring
services across the social, economic and
governance sectors. The Humanitarian
Country Team (HCT) issued a Flash Appeal
to address immediate humanitarian needs,
while the United Nations Country Team
(UNCT) is simultaneously working on a
tripartite basis (work being carried out in
this respect by the World Bank, the European
Significant
economic impact

35.1%
decline in GDP
in 2024

high unemployment rates

collapse of essential
services
20
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2934839_0021.png
fully independent State must be recognized
by all. […] The two-State solution is the only
way to address the legitimate aspirations of
both Israelis and Palestinians, [and] it remains
the only way to achieve durable and equitable
peace in Israel, in the State of Palestine and in
the region.”
69
Early recovery approaches should incorporate
development principles into humanitarian
relief, focusing on immediate needs while
laying the groundwork for sustainable
recovery and coherence between different
actors. For early recovery to be effective, key
conditions must be met, including security,
political stability, access to essential services
and adequate donor funding. These conditions
are crucial to support recovery efforts that
can eventually lead to a sustainable and
peaceful future.
Simulations in this assessment show that the
Palestinian economy may be able to reach
its pre-war level – even if it may take up to
10 years – if recovery plans expand beyond
humanitarian support to include support for
the reconstruction of destroyed capital, if
stifling economic restrictions are lifted, and
if the business climate is improved.
The Palestinian Government requires critical
support and strengthening of its institutions
to effectively govern and lead recovery
and reconstruction efforts in the State of
Palestine. Although a political settlement
for future governance remains unclear,
immediate efforts should focus on involving
technical expertise in providing essential
services at local level. Inclusive recovery
planning by different actors must align with
the strategies and human rights obligations
of the State of Palestine, while prioritizing
community engagement to mitigate
tensions stemming from displacements and
resource allocation.
and freedom of movement, establishing
a political framework that promotes
Palestinian ownership led by the PA, and
providing minimum essential services such
as water, electricity and telecommunications.
These efforts are critical given the severe
restrictions imposed by Israel since Hamas’s
takeover in 2007, which have significantly
hampered the movement of goods and people,
worsening the humanitarian crisis. Additionally,
the increased military operations and
movement restrictions in the West Bank, even
before the war, have further disrupted the
socioeconomic conditions for the Palestinian
people. The closure of border crossings in Gaza
by Israel has led to limitations on essential
supplies, including medical and construction
materials, necessary for recovery. In the
first half of 2022, the volume of goods
entering Gaza was approximately 30 per cent
lower than pre-closure levels, despite a
50 per cent increase in the population. The
»
Essential conditions
for recovery
The UNCT and HCT have identified essential
conditions for scaling up early recovery efforts
in Gaza, which include ensuring security
©Mohammad Bash/stock.adobe.com
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2934839_0022.png
current stringent security checks and limited
operational crossings have resulted in slow
and unpredictable delivery of relief supplies,
with trucks often facing delays of two to
three weeks.
70
Continued restrictions in the
occupied Palestinian territory could lead to
increased unemployment and poverty, further
complicating economic revitalization.
This is further reflected in the impact
analysis of the “RER” and “NRER” scenarios.
The “RER” scenario could result in minimal
socioeconomic benefits, while the
“NRER” scenario could lead to significant
improvements that may help put the
Palestinian GDP back on track. Therefore, as
part of lifting the restriction to allow efficient
recovery investments, it is vital to broaden
the importer and distributor base, streamline
import procedures, and support the private
sector in the West Bank to restore its links
with Gaza. Without lifting these restrictions,
recovery and rebuilding after the ongoing
war will face substantial obstacles, risking
prolonged shortages of housing, medical
services and essential infrastructure.
3.
Scale up access to protection services, preserve
social cohesion, and promote early restoration of
human rights-based governance, justice and rule
of law systems.
4.
Remedy the war’s impact on the environment
and cultural capital through early interventions
to protect and restore food systems, land and
water resources, as well as cultural resources
and capacities.
The Palestine Ministry of Social Development,
in collaboration with the League of Arab
States and ESCWA, launched the National
Strategy to Reduce Multidimensional Poverty
(2023–2030) in 2023.
71
The goal is to reduce
the MPI to 5.5 per cent by 2030, representing
a 5-percentage-point decrease from its
pre-crisis level of 10.2 per cent in 2017, as
shown in table 4. However, this target is
challenging to achieve, especially given the
ongoing war and the severe damage inflicted
on the economy and the social well-being
of individuals across the entire occupied
Palestinian territory.
In planning interventions to address these
deprivations, the State of Palestine must
consider several key factors: the significance
of each indicator, the depth of poverty
(measured by the number of deprivations
per household), available resources and other
relevant considerations. A central assumption
regarding State intervention is its ability to
effectively target specific households. The State
needs to evaluate whether it can concentrate
its resources on the most deprived and
multidimensionally poor households, or if it lacks
this capacity. It is acknowledged that resource
targeting can be imprecise at various levels,
potentially resulting in resources being spread
too thinly across all deprived households within
the targeted population. Consequently, only a
subset of deprived and multidimensionally poor
households may be lifted out of deprivation and
multidimensional poverty.
Multidimensionally poor households can
transition from poor to non-poor when one
or more of their indicators change from
deprived to non-deprived. In contrast,
multidimensionally poor households may
see changes in one or more indicators but
remain multidimensionally poor overall.
Prioritization and optimization of resource
allocation
Building the capacity of Palestinian
institutions for recovery and reconstruction,
reconnecting Gaza and the West Bank,
empowering civil society groups, supporting
micro, small and medium enterprises
(MSMEs), mobilizing international and private
sector sources of early recovery financing,
and building on existing self-help networks
are crucial elements for recovery. To this
end, prioritization and optimization of
resource allocation should consider the four
main objectives of the UNCT and HCT early
recovery approach:
1.
Early restoration of jobs and revitalization of
access to livelihoods, employment opportunities,
and markets for goods and services, along with a
functioning private sector and value chains.
2.
Early restoration of access to basic
socioeconomic services and social protection
mechanisms, enabled by risk managed and
progressive debris removal and disposal, as well
as explosive ordnance clearance.
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Finally, non-multidimensionally-poor
households remain classified as such, although
they may also experience some indicators
shifting from deprived to non-deprived.
As well as the assumptions regarding the
imprecise targeting ability of the State
(including both exclusion and inclusion
errors), additional assumptions on public
expenditure efficiency need to be estimated.
Ideally, public budgets are intended to
allocate resources effectively to meet
community needs, prioritizing essential
welfare services over profitability. In addition
to considering the cost and demand for
goods and services, budgets consider factors
such as social welfare, equity and economic
impact. Analysing data
72
collected and
compiled by ESCWA on public expenditure
for Jordan and Egypt, we can see how much
of the annual budget is being spent on
items such as social expenditure, interest
payments, housing, health and education in
recent years.
Considering all the technical assumptions
of the models, the normative assumptions
of the MPI, the results from section 2, and
the objective of achieving pre-crisis levels
of the MPI, we applied an optimization
routine for Gaza. This allows us to
visualize the optimal resource allocation
across the MPI dimensions, as shown in
figure 9.
Given resource scarcity, recovery plans
will have to optimize resource allocations
to maximize impact (figure 9). Priority
may have to be given to the “housing
and access to public services” dimension
such as water and electricity to ensure
universal access. The health sector should
be the next focus, improving access to
clinics and hospitals. Re-establishing
private ownership and reconstructing
demolished homes, businesses and
agricultural land will also be crucial, along
with prioritizing education and school
enrolment. While pre-war income poverty
in Gaza was already moderate, the recovery
should have a multidimensional focus on
infrastructure, housing and education,
rather than simply providing monetary
transfers to restore pre-war conditions.
Figure 9. Optimal
resource allocation across MPI dimensions
14%
Safety
and use of
assets
11%
Education
29%
Housing
conditions
and access
to public
services
21%
Health
Source:
ESCWA estimates.
23
Employment
13%
Monetary
Resources
8%
Personal
Freedom
4%
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1.
Endnotes
UNICEF, 2024a.
2. OCHA, 2024a, citing data from the Palestinian Ministry of Health.
3. OCHA, 2024b.
4. United Nations, 2024.
5. PCBS, accessed on 30 September.
6. PCBS, accessed on 14 September.
7. OCHA, 2024c; ACT Alliance, Action Aid, and Anera (2024)..
8. UNRWA, 2024a.
9. OCHA, 2024d.
10. WHO, 2024a.
11. Integrated Food Security Phase Classification, 2024a. Phase 5 corresponds to “extreme lack of food, starvation, and
exhaustion of coping capacities”.
12. WHO, 2024b.
13. OHCHR, 2024a.
14. UNRWA, 2024a.
15. OCHA, 2024c.
16. UN Women, 2024.
17. UNICEF, 2024b.
18. Integrated Food Security Phase Classification, 2024b.
19. ILO and PCBS, 2024.
20. World Bank, 2024.
21. PCBS, 2023.
22. OHCHR, 2024b.
23. UNDP and ESCWA, 2024.
24. WHO, 2024a.
25. OCHA, 2024e.
26. OHCHR, 2024c.
27. OCHA, 2024f.
28. UNICEF, 2024c.
29. OCHA, 2024g.
30. UNICEF, Handicap International and World Vision, 2024.
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31. Ibid.
32. UNICEF, 2024d.
33. UNICEF, Handicap International and World Vision, 2024.
34. Ibid.
35. OCHA, 2024f.
36. Ibid.
37. OCHA, 2024c.
38. OCHA, 2024f.
39. LSHTM, 2024.
40. UNRWA, 2024a.
41. WHO, 2024a.
42. UN Women, 2024.
43. OCHA, 2024c.
44. WHO, 2024c.
45. WHO, 2024d.
46. UNRWA, 2024b.
47. UNEP, 2024.
48. Ibid.
49. Ibid.
50. Neimark, B. and others, 2024.
51. World Bank Group, 2024a.
52. Palestine Monetary Authority, 2024.
53. The pre-war average was 4–5 per cent per quarter.
54. World Bank Group, 2024a.
55. UNDP, 2023.
56. UNDP and ESCWA, 2024.
57. UNCTAD, 2024.
58. Ibid.
59. Ibid.
60. According to the International Labour Organization (ILO), by the end of May 2024, 87.2 per cent of households in the
West Bank had reported a decrease in income. Closures of businesses, particularly in East Jerusalem, have further
weakened the economy, with 80 per cent of businesses in the Old City ceasing operations. In all, 98.8 per cent
of businesses in the West Bank had been adversely affected by the war in Gaza, facing operational and financial
challenges. Of these, 65.3 per cent had reduced their workforce permanently or temporarily, while 73.3 per cent had
cut employee working hours to manage costs.
27
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61. World Bank Group, 2024b.
62. The Multidimensional Poverty Index framework has been adopted officially in Palestine.
For details, see https://www.mppn.org/multidimensional-poverty-profile-in-palestine/.
63. Recent figures from ILO suggest that unemployment rates have risen sharply, resulting in a substantial loss of jobs,
which has directly affected income levels for many, not just the unemployed. In fact, 87.2 per cent of households in
the West Bank have reported a decrease in income. However, other dimensions, such as health and education, have
not been directly affected by the recent incursions into the West Bank.
64. While data on the HDI are not available before 2004, a linear backward extrapolation exercise indicates that HDI would
regress to 2000 levels, representing a setback of 24 years of progress.
65. While data on HDI are not available before 2004, a backward extrapolation exercise indicates that HDI in Gaza will
regress by 69 years (to June 1955 levels).
66. Using linear interpolation, 0.676 would have been reached in early January 2008.
67. According to a report by the Palestine Economic Policy Research Institute, the PA receives less than 43.1 per cent of its
clearance revenue entitlements on average, and these are subject to delays.
68. https://unsco.unmissions.org/sites/default/files/unct-hct_early_recovery_approach_and_action_plan_for_gaza_-_
september_2024_-_ahlc.pdf.
69. Statement by the Secretary-General to the Security Council, 23 January 2024. Available at https://press.un.org/
en/2024/sgsm22113.doc.htm.
70. ACAPS, 2024.
71. Palestine Ministry of Social Development, n.d.
72. Ministry of Finance, “Expenses by functional classification and overview”, for various years (2022/2023). The data
are compiled based on the ESCWA SEM methodology. The data are budget estimates as actual expenditures are not
available. The real series is constructed by deflating the nominal series by the Consumer Price Index, using 2019 as a
base year (source: IMF DataMapper). Data for the State of Palestine are currently not available.
Shared Prosperity
Dignified Life
28
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