The economic crisis in the occupied Palestinian territories, stemming from Israeli aggression since 2023, ranks among the ten worst crises the world has witnessed since 1960, according to the United Nations Conference on Trade and Development (UNCTAD). The organization described the situation in Gaza as standing apart and representing the most severe economic crisis ever recorded.

Worst economic recession in Palestine on record

According to UNCTAD’s report, long-term restrictions and ongoing Israeli attacks have pushed the Palestinian economy into its worst recession ever, erasing decades of developmental progress and exacerbating financial and social fragility.

In the report titled "Developments in the economy of the Occupied Palestinian Territory," UNCTAD found that two years of military operations and restrictions caused an unprecedented collapse of the Palestinian economy. This has occurred within a context of comprehensive economic and institutional fragility, resulting in serious social and environmental consequences.

Widespread damage to infrastructure, means of production, and public services has wiped out decades of social and economic progress in the occupied Palestinian territories. The resulting economic crisis ranks among the ten worst worldwide since 1960. The situation in Gaza stands apart because it represents the most severe economic crisis ever recorded, the report explained.

The collapse of revenues and the Israeli government’s withholding of financial transfers have severely limited the Palestinian government’s ability to maintain essential public services and invest in recovery. This comes at a critical time, as massive investment is needed to rebuild crumbling infrastructure and address escalating environmental, social, and economic crises.

Read more: Gaza lying in ruins: 14-year path to recovery amid mass displacement

Palestinian economy near total collapse

The UN report stated that the intensifying war has pushed the Palestinian economy from prolonged deterioration to near-total collapse, with deep repercussions across economic, social, humanitarian, and environmental sectors. In Gaza, the entire population has fallen into multidimensional poverty. Meanwhile, the West Bank is experiencing its worst recession ever due to growing insecurity, movement and access restrictions, and lost opportunities across all sectors.

The report noted that by 2024, Palestinian GDP had fallen to its 2010 level, while GDP per capita regressed to 2003 levels. According to UNCTAD, in less than two years, 22 years of development gains were wiped out.

The report also pointed to the blockade of Gaza that has lasted around 20 years. Approximately 2.3 million Palestinians in Gaza face severe trade, movement, and resource access restrictions in an area of 365 square kilometers. These restrictions have dismantled Gaza’s productive base, making it almost entirely dependent on external aid.

In 2024, Gaza’s GDP contracted by 83% compared to 2023, following a sharp decline the previous year. Over these two years, cumulative losses reached 87%, leaving GDP at $362 million. GDP per capita fell to $161, one of the lowest rates in the world, representing just 4.6% of the West Bank’s per capita GDP, whereas both were nearly equal in 1994.

Recovery will take decades

The massive destruction of infrastructure, loss of productive capacity, and population displacement have caused permanent damage to human capital. Interruptions to education and basic services will have long-term effects on livelihoods and community resilience.

Severe damage to housing, public services, and essential infrastructure has disrupted access to food, water, healthcare, and public services, creating a humanitarian and economic emergency.

The scale of the damage significantly complicates economic recovery and the restoration of basic living conditions without substantial international assistance. Even with significant aid, it could take decades for GDP to recover to pre-October 2023 levels. For meaningful recovery, especially regarding healthcare, education, clean water, and basic infrastructure, the international community must ensure the sustainability of the ceasefire agreed upon in October 2025, recognizing the urgent need to deliver humanitarian aid without delay.

Sharp economic contraction in the West Bank

Meanwhile, ongoing settlement expansion and movement restrictions continue to fragment the West Bank, disrupting trade, investment, and access to land, resources, and markets. These restrictions affect over 3.3 million people, increase transport costs, extend travel times, and limit access to markets, employment, education, and healthcare.

Since late 2023, movement restrictions have intensified, further impacting trade and production. GDP in the West Bank contracted by 17%, while GDP per capita fell by 18.8%, returning to levels last recorded in 2014 and 2008, respectively.

Over $70 billion needed to rebuild Gaza

Regarding Gaza’s reconstruction, the UN report estimated that the cost exceeds $70 billion, highlighting the scale of investment required to rebuild infrastructure and restore livelihoods.

UNCTAD called on the international community to take immediate and decisive action to halt the economic collapse, resolve the humanitarian crisis, and lay the foundations for lasting peace and development. It urged the implementation of a comprehensive recovery plan for the occupied Palestinian territories, including coordinated international aid, resumption of financial transfers, and measures to ease restrictions on trade, movement, and investment.

Read more: Gaza needs multibillions and 70 years to be habitable again: UNCTAD