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TWN
Info Service on WTO and Trade Issues (Sep26/19) UN:
UNCTAD warns of systemic collapse of Palestinian economy Geneva, 25 Sep (D. Ravi Kanth) -- The President of the State of Palestine, Mr Mahmoud Abbas, on 24 September, exposed at the United Nations the grotesque genocidal crimes committed by Israel in the occupied territories of Palestine, Gaza, and East Jerusalem. The Palestinian leader portrayed Israeli actions in Gaza and the West Bank as "a malicious colonial scheme" aimed at forcing Palestinians to leave their homeland. But Mr. Abbas said he still hoped for "a democratic Palestinian state that respects the rule of law and human rights, a non-militarized state that lives in security and peace alongside the state of Israel." In a rather strange coincidence, the Geneva-based UN Trade and Development, previously called the United Nations Conference on Trade and Development (UNCTAD), issued its report also on 24 September on the state of the Palestinian economy. Without mentioning Israel, which allegedly caused a genocide of historic proportions, with some analysts describing it as an "ecocide", the report painted a bleak picture of the economic and social conditions in the occupied Palestinian territories, which has a daily per capita income of only 58 cents at this moment. Releasing the delayed report on UNCTAD assistance to the Palestinian people, it chronicled the worst economic and social conditions caused largely by Israel on all fronts. The central theme of the UNCTAD report is stark: the prolonged Israeli military operations and long-standing restrictions have driven the Palestinian economy into its "most severe contraction on record," effectively erasing decades of development gains and creating a humanitarian and economic catastrophe. The report's findings, while focused on the present crisis, are framed by a historical analysis of the cumulative cost of occupation, providing a holistic view of a deliberately engineered economic decline. GAZA ECONOMIC COLLAPSE The report's most dramatic findings concern the Gaza Strip, which has been reduced to a state of almost total economic and social devastation. It said that the scale of damage is staggering and unprecedented in modern economic history. Highlighting the macroeconomic devastation, the report said in 2024, Gaza's GDP contracted by 83% compared to the previous year, following a sharp decline in 2023. Over the 2023-2024 period, the cumulative GDP contraction was 87%. By 2025, the annual real GDP per capita in Gaza had plummeted to just $212, or a mere $0.58 per day. This represents a fall to just 17% of its already low 2022 level. Such a figure places Gaza among the poorest and most economically devastated regions on Earth, said Mr Mutasim Elagraa, the coordinator overseeing the Assistance to the Palestinian People unit at UNCTAD. On the collapse of productive capacity, Mr Elagraa said the physical destruction of Gaza's economic base is near-total, suggesting that the report indicates that 92% of all economic establishments in Gaza have been destroyed or damaged. This has brought productive activity to a near-total halt across all sectors, he told reporters at a press conference, adding that agricultural and industrial output each plunged by 94% compared with 2022, while construction output - a key indicator of future recovery potential - collapsed by 99%. Clearly, this systematic dismantling of the economy's productive capacity (by Israel) ensures that any future recovery will be extraordinarily difficult, requiring a complete rebuilding of the private sector from scratch. According to the UNCTAD coordinator, the labour market in Gaza has effectively ceased to function. In 2025, only 123,300 Gazans were employed, leaving over 90% of the working-age population without work. The ILO reports an unemployment rate of 85.1% in Gaza as of mid-2026, with average real daily wages collapsing from $16.0 to just $2.1. The economic implosion has triggered a profound humanitarian crisis, Mr Elagraa argued, suggesting that the entire population of Gaza has plunged into multidimensional poverty, and prices have spiraled, with food prices 274% above 2022 levels. On reconstruction needs, the UNCTAD report estimates that the cost of rebuilding Gaza is astronomical and continues to rise. As of early 2026, UNCTAD estimated total recovery and reconstruction needs at $71.5 billion, which comprises $35.2 billion in physical infrastructure damage and $22.7 billion in economic and social losses. Notably, this estimate exceeds the combined pre-conflict GDP of Gaza and the West Bank by more than 2.5 times, underscoring the sheer scale of the challenge. The report warns that this figure "will continue to increase until a sustainable ceasefire is achieved". CRISIS IN WEST BANK While the situation in Gaza is uniquely catastrophic, the report emphasizes that the West Bank is also undergoing its most severe economic downturn on record. The drivers of this decline are distinct but complementary to the destruction in Gaza. Mr Elagraa has suggested that growing attacks on the people living in the West Bank and new forms of settler colonialism seem to suggest that the conditions are worsening by the day. During the assessed period from Q3 2023 to Q3 2025, real GDP in the West Bank contracted by 14.2%. This decline is attributed to heightened insecurity, severe movement and access restrictions, and the loss of productive opportunities across all sectors. * Labour market strain: The West Bank's unemployment rate reached 28.5% by mid-2026. The loss of jobs in Israel, combined with the broader economic contraction, has pushed unemployment to around 35%, according to some Palestinian Authority estimates. While a modest decline in unemployment to 26.1% is projected for 2026, this remains a severe level and is contingent on easing restrictions and the trajectory of reconstruction efforts. * Fiscal crisis: A critical factor exacerbating the West Bank's economic woes is the fiscal crisis facing the Palestinian Authority (PA). The report highlights that Israel has continued to withhold clearance revenues (tax and customs duties collected on behalf of the PA) for extended periods. Between January 2019 and March 2026, cumulative withheld revenues and deductions exceeded $3.67 billion. This has severely constrained the PA's ability to pay salaries, maintain essential public services, and invest in recovery, creating a vicious cycle of economic decline. CUMULATIVE COST According to the UNCTAD report, the long-term economic cost of the occupation for the Palestinian people over the period 2000-2024 reflects that the current crisis is not an isolated event but the culmination of decades of structural impediments to economic development. The key finding of this cumulative study is that between 2000 and 2024, the Palestinian economy lost an estimated $212.2 billion in potential GDP (in constant 2015 dollars). To put this figure into perspective, it is equivalent to 19.4 times the size of the Palestinian GDP in 2024. The report also notes that, in parallel, the economic value generated by Israeli settlements in the occupied territory during the same period (2000-2024) runs into hundreds of billions of dollars (at over $832 billion). It highlights the underlying dynamic: the Palestinian economy is not simply underperforming; it is being actively suppressed while a parallel, settlement-based economy is being sustained and expanded within the same territory. The report's true value lies in its quantification of the cumulative cost of occupation: $212.2 billion in lost potential GDP over a quarter-century. This figure transforms a political argument into an economic indictment. It demonstrates that the Palestinian economy is not merely a victim of cyclical downturns or poor governance but is structurally prevented from realizing its potential. The staggering reconstruction needs of $71.5 billion for Gaza alone serve as a grim reminder of the scale of the challenge ahead. The collapse of Gaza's economy was described as the most severe economic crisis on record, based on the depth of output decline and the time expected to recover to pre-crisis conditions. Approximately 92% of economic establishments capable of generating jobs and income are damaged or destroyed. Hundreds of thousands of jobs have been lost since 2023. More than 90% of the working-age population is without employment. Military operations have nearly eliminated Gaza's productive capacity, while the population has been displaced and pushed into multidimensional poverty. Mr Elagraa described the multidimensional poverty that has enveloped the Palestinian territories. He said multidimensional poverty includes not only inadequate income, but also the lack of suitable shelter and access to essential services such as health care, education, and sanitation. Before the crisis that began in October 2023, around two-thirds of Gaza's residents were poor. The report states that the entire population is now multidimensionally poor. He emphasized the drop in Gaza's annual GDP per capita, suggesting that it fell to $212 in 2025. A separate presentation figure expressed the daily equivalent as approximately $0.58 per person. Price levels were reported to be 274% higher than in 2022. Even the sectoral activity has precipitously dropped due to the destruction caused by Israel, with growth in agriculture dropping by 94%, industrial growth by 94%, and construction down by 99%. Only 1.5% of cropland remained both usable and accessible, contributing to dependence on humanitarian food aid. Mr Elagraa said the estimated cost of Gaza's reconstruction and recovery was $71.5 billion, based on a joint assessment by the World Bank, the European Union, and the United Nations, and that this estimate could rise. +
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