UN says Palestinian economy faces worst collapse

The Palestinian economy has suffered an unprecedented breakdown as two years of war in Gaza and sweeping economic restrictions have erased decades of growth.

According to the United Nations Trade and Development (UNCTAD) report, posted on its X page, extensive damage to infrastructure, productive assets and public services has wiped out decades of socioeconomic progress in the occupied Palestinian territory, Caliber.Az reports.

🇺🇳 The prolonged military operation and long-standing restrictions have driven the economy of the Occupied Palestinian Territory into its most severe contraction on record, wiping out decades of development gains and deepening fiscal & social fragility.

▶️https://t.co/2FJjOx5mjP pic.twitter.com/vhPGFsTuec

— UN Trade and Development (@UNCTAD) November 25, 2025

It notes that Palestine’s per-capita GDP had fallen back to its 2003 level by the end of last year, effectively nullifying 22 years of development progress.

As a result, the economic crisis ranks among the ten most severe worldwide since 1960.

The UN warns that the scale of destruction in Gaza after two years of war between Israel and Hamas means the enclave will rely heavily on broad international assistance, and reconstruction could take decades.

For nearly two decades, 2.3 million Palestinians in Gaza have lived under severe restrictions on trade, movement, and access to essential resources within a 365 km² area—one of the most densely populated regions in the world.

Limited entry of goods, combined with tight controls on productive inputs, equipment, and technology, as well as recurrent military operations, has dismantled Gaza’s economic base and created an almost complete dependence on external assistance.

In 2024, Gaza’s GDP fell by 83% compared with 2023, following an already steep decline the previous year. Over 2023–2024, GDP contracted by a cumulative 87% to $362 million. GDP per capita dropped to $161—one of the lowest figures globally—amounting to just 4.6% of the West Bank’s per capita GDP, a dramatic fall from near parity in 1994.

Widespread destruction of infrastructure, erosion of productive capacity, and the displacement of the population have inflicted lasting harm on human capital.

Disruptions to education and basic services are expected to have long-term consequences for livelihoods and the foundations of societal resilience.

Reconstruction and recovery costs in Gaza are estimated to exceed $70 billion, highlighting the scale of investment needed to rebuild infrastructure and restore economic life.

UNCTAD’s report urges immediate and substantial action from the international community to halt the economic collapse, address the deepening humanitarian crisis, and set the conditions for sustainable peace and development.

By Jeyhun Aghazada