Gaza's economy shrank by 86% in first half of 2024, IMF says

Poverty is affecting almost the entire population of Palestinian enclave

Buildings destroyed by Israeli air strikes on Khan Younis, southern Gaza, on October 2. EPA

Gaza's gross domestic product dropped by nearly 86 per cent in the first half of the year due to Israel’s attacks, which have caused extensive destruction, the International Monetary Fund said on Thursday.

IMF spokeswoman Julie Kozack told a news briefing that the West Bank's first-half GDP had declined 25 per cent, with a possibility of further drop.

While Israel's economy shrank by about 20 per cent in the fourth quarter of last year, and although there has been some recovery, it remained only partial during the January-June period, she said.

“The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond,” Ms Kozack said.

Poverty is affecting almost the entire population of Gaza and is rapidly increasing in the West Bank. By early 2024, almost 82 per cent of private sector establishments in Gaza were either damaged or completely destroyed.

Ninety-six per cent of private sector businesses in the West Bank experienced declining sales, and 42.1 per cent reported a reduction in the number of employees reporting to work, UN Trade and Development said in a report last month.

An estimated 200,000 jobs have been lost in the Gaza Strip, while 144,000 people are no longer employed in the occupied West Bank as a result of the violence.

Ms Kozack said the Washington-based lender is also monitoring the situation in southern Lebanon with “grave concern”. Israel on Tuesday launched a ground invasion in Lebanon in its offensive against Hezbollah.

“In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation,” she said. “The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure.”

The IMF is expected to update its economic projections this month after its meetings with the World Bank.