The year-long conflict between Israel and Hamas has had a devastating impact on the economies of the occupied West Bank and Gaza, according to the International Monetary Fund (IMF).
Julie Kozack, the IMF’s communications chief, noted on Thursday that Gaza’s economy has experienced a staggering collapse, with GDP in the territory plummeting by nearly 90 percent during the first half of 2024.
“Preliminary official estimates indicate an 86 percent decline in GDP for Gaza in the first six months of 2024,” Kozack said during a press briefing.
She highlighted that the region’s civilian population is enduring extreme hardships due to a deepening humanitarian crisis, compounded by the inadequate delivery of aid. Gaza’s economy, already fragile, has been brought to its knees as the conflict has severely disrupted daily life, trade, and infrastructure.
In the West Bank, the situation, while less severe than in Gaza, is also dire. The IMF official reported that the region’s economic outlook, which was already grim before the escalation of hostilities, has worsened significantly. Preliminary estimates suggest a 25 percent decline in GDP for the West Bank during the same period.
The ongoing war between Israel and Hamas, which began following the October 7, 2023, Hamas attack that left 1,205 people dead, primarily civilians according to Israeli sources, has had far-reaching consequences.
Israel’s retaliatory offensive in Gaza has claimed the lives of over 41,788 people, predominantly civilians, according to the Hamas-controlled Gaza health ministry. These figures have been deemed reliable by the United Nations.
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Israel’s economy has not emerged unscathed from the conflict either. The war has led to downgrades by three major international credit rating agencies, which have revised Israel’s debt ratings downward.
Official data revealed that after a steep 21 percent contraction in the last quarter of 2023, the Israeli economy managed a 14 percent rebound in the first quarter of 2024. However, growth significantly slowed in the second quarter to a meager 0.7 percent.
Kozack also expressed concern over Lebanon’s deteriorating economic situation, which has been exacerbated by the recent escalation of violence in the region. She noted that Lebanon’s fragile economy, already beset by years of instability and financial crises, is now being further strained by the intensification of conflict, particularly in southern Lebanon.
Hezbollah, a close ally of Hamas, has been engaged in cross-border exchanges of fire with Israeli forces since the October 7 attack. The conflict escalated after Israel initiated ground raids into parts of southern Lebanon, following intense bombardment of Hezbollah-held areas.
Lebanon’s health ministry has reported that over 1,000 people have died as a result of the ongoing violence, and hundreds of thousands have been displaced from their homes. The humanitarian situation in the country is rapidly worsening, as civilians bear the brunt of the fighting.
Adding to the tensions in the region, Iran, a key backer of Hezbollah, launched around 200 rockets in a missile strike on Israel earlier this week. This move followed the killing of Hezbollah leader Hassan Nasrallah in a bombing in southern Beirut.
Israeli Prime Minister Benjamin Netanyahu responded by warning Tehran that it would face consequences for its actions. In the wake of these developments, U.S. President Joe Biden revealed that he has been discussing potential Israeli military strikes on Iranian oil facilities.
His comments have sent oil prices soaring, just weeks before the U.S. presidential election, adding to the global economic uncertainty surrounding the conflict.