A year of war: Unemployment surges to 80% and GDP contracts by 85% in Gaza

Like Maoist armed conflict hit Nepal’s economy, a year of war in Gaza has caused unprecedented and wide-ranging devastation of the labour market and wider economy across the Occupied Palestinian Territory (OPT), according to a report from International Labour Organization (ILO).
The unemployment rate in Gaza and the West Bank, the two areas comprising the OPT, surged to an average of 51.1 percent over the past 12 months, according to ‘A Year of War in Gaza: Impacts on Employment and Livelihoods in the West Bank and Gaza Strip’, the fifth and latest in a series of bulletins from the ILO and the Palestinian Central Bureau of Statistics (PCBS).
In the West Bank, the unemployment rate averaged 34.9 percent between early October 2023 and the end of September 2024, while in Gaza it averaged a staggering 79.7 percent.
The war’s wider economic toll has also been substantial, with real GDP declining in the OPT by an average of 32.2 percent over the past year, it reads, adding that the West Bank saw a contraction of 21.7 percent compared to the preceding 12 months, while GDP in the Gaza Strip dropped by 84.7 percent.
This contraction in real GDP is unprecedented in the OPT’s recent history. Even during the most severe economic downturn of the second Palestinian uprising against Israeli occupation in 2001, real GDP fell by 14.9 percent, less than half the scale of the current decline, the bulletin explains.
“The impact of the war in the Gaza Strip has taken a toll far beyond loss of life, desperate humanitarian conditions and physical destruction,” said ILO Regional Director for Arab States Ruba Jaradat. “It has fundamentally altered the socio-economic landscape of Gaza, while also severely impacting the West Bank’s economy and labour market. The impact will be felt for generations to come.”
With the war now entering its second year, economic strains continue to mount across the OPT, the bulletin outlines, leading to even further dramatic escalations in hardship. In the Gaza Strip, nearly 100 percent of the population now lives in poverty, reflecting the dire situation faced by families struggling to meet basic needs. Meanwhile, the significant economic contraction in the West Bank is estimated to have more than doubled the short-term poverty rate, rising from 12 percent in 2023 to 28 percent by mid-2024.
The figures published in the bulletin reflect the shutdown of most economic activities in Gaza due to the destruction of homes and infrastructure, and the recurring displacement of workers and employers. This has led either to complete termination of work or to a predominance of informal and irregular work, primarily centred on the provision of essential goods and services.
In the West Bank, Israeli barriers to movement of persons and goods, coupled with broader trade restrictions and supply chain disruptions, have severely impacted the economy. The closure of the Israeli labour market to Palestinian workers has further strained livelihoods.