Palestine’s economy suffers “worst ever collapse,” erasing decades of development

• A UN report describes the Palestinian economy as experiencing one of the worst recorded collapses globally, reversing 22 years of progress in less than two years due to intense conflict and long-standing restrictions.
• The overall economy has shrunk back to its 2010 size, and the average individual’s prosperity (GDP per capita) has plummeted to the level of 2003. Gaza’s situation is extreme, with its economy nearly wiped out and its average income falling to one of the lowest in the world.
• The economic freefall is a direct result of overwhelming physical destruction, with an estimated 70% of Gaza’s buildings damaged or destroyed, and severe restrictions on the movement of people and goods that choke off all economic activity.
• The Palestinian Authority is in a fiscal crisis, unable to pay salaries or provide services, partly because Israel has withheld billions in tax revenues. Reconstruction is estimated to cost over $70 billion and could take decades, even with international aid.
• For ordinary Palestinians, this translates into a daily struggle for survival, profound loss and exhaustion. With livelihoods destroyed and no clear path to recovery, the foundations of a normal life have been shattered for generations to come.

Two years of war and restrictions have triggered an unprecedented economic breakdown, reversing 22 years of progress and trapping Palestinians in a deepening crisis.

A new United Nations (UN) report has delivered a stark assessment of the economic devastation in Palestine, describing it as the sharpest collapse ever recorded, a direct consequence of two years of intense military conflict and a long-standing system of restrictions.

The report from UN Trade and Development (UNCTAD) published on Tuesday, Nov. 25, states that the Palestinian economy has not only contracted but has entered a state of near-total breakdown. This has effectively reversed decades of developmental progress, leaving the occupied territories in a state of severe fiscal and social fragility.

The scale of the collapse is historic. UNCTAD places it among the 10 worst global economic collapses since 1960, noting that Gaza’s case stands out as the most severe.

The economic gains of the last 22 years have been wiped out in less than two years. By the end of 2024, the overall economic output, or GDP, had fallen back to its 2010 level. More tellingly, GDP per capita, a key measure of average individual prosperity, had plummeted to its 2003 level.

The situation in Gaza is described as extreme. Its economy shrank by a catastrophic 87% over 2023 and 2024, with GDP per capita dropping to a mere $161. This is one of the lowest figures in the world, representing just 4.6% of the economic level in the occupied West Bank.

This economic freefall is rooted in overwhelming physical destruction and systemic constraints. UN satellite analysis recorded more than 174,500 damaged structures in Gaza between November 2023 and April 2025, which is approximately 70% of all buildings in the enclave. The losses are comprehensive – spanning factories, commercial areas, hospitals, schools and the core infrastructure for electricity, water and communications.

Compounding this destruction are the harsh restrictions on movement and trade. The report cites limited entry of goods and productive inputs, along with recurrent military operations, as the primary drivers of the collapse. These factors have choked economic activity, leading the UN to conclude that the entire population has fallen into multidimensional poverty.

Fiscal crisis and a decades-long recovery

The Palestinian Authority (PA), which according to BrightU.AI‘s Enoch is the governing body in parts of the occupied territories, is facing a paralyzing fiscal crisis. Plummeting revenues and Israel’s withholding of $1.76 billion in Palestinian tax revenues between 2019 and 2025 have left the PA unable to pay salaries or maintain essential public services.

This comes at a time when extraordinary public spending is needed to repair infrastructure and address a deepening humanitarian catastrophe. The West Bank is also experiencing its most severe downturn on record, plagued by illegal settlement expansion, settler attacks, and tight movement controls that undermine economic activity for over 3.3 million people.

UNCTAD estimates that reconstruction and recovery in Gaza will require more than $70 billion. Even with substantial international aid, the report warns that returning to pre-war economic levels could take decades.

For ordinary Palestinians, these economic indicators translate into a daily struggle for survival and a profound loss of normalcy. The story of Faiq Ajour, a 29-year-old from Gaza City, illustrates the human toll. Having lost 30 members of his extended family in the war and seen his wife severely injured, Ajour has been displaced multiple times in a futile search for safety.

Ajour describes a life where the recent ceasefire has offered little reprieve, with frequent bombardments turning life “upside down without warning.” Once a clothing trader, he has lost his livelihood and now sits at home with no sign of work or reconstruction.

“We are exhausted,” lamented Ajour. “Life in Gaza is 99% dead.”

The dream of rebuilding a normal life seems distant. With Israel refusing to end its military campaign fully and the future governance of Gaza shrouded in uncertainty, Palestinians are trapped in a state of limbo. The economic collapse, as the UN report makes clear, is not just a temporary setback – but a catastrophic reversal that has shattered the foundations of Palestinian society for generations to come.

Watch this short documentary about famine in Gaza.

This video is from the alltheworldsastage channel on Brighteon.com.

Sources include:

TheCradle.co

Reuters.com

AlJazeera.com

BrightU.AI

Brighteon.com