War has brought ‘complete collapse’ of Gaza’s economy

Live updates: Follow the latest news on Israel-Gaza

Gaza’s economy has completely collapsed as Israel continues to bombard the besieged enclave, with little employment and the supply chain shut, a senior executive of a Palestine-based non-profit organisation said.

“The actual employment is negligible, people who may be still receiving wages from the government … public employment, there’s a certain amount,” Raja Khalidi, director general of the Palestine Economic Policy Research Institute, told The National in an interview.

“People are working but it’s a very small part of the public service sector.”

Most of the bakeries in the besieged enclave of 2.4 million people are closed and the whole supply chain has fallen apart.

“Even the simplest productive activities like bakeries are barely getting by. The whole supply value chain is closed … supermarkets have run out of stock. How can there be an economy?”

Israel has been shelling Gaza since the war began on October 7, with at least 13,300 people killed as of Tuesday, according to official data from the strip.

The economic outlook for Gaza was grim even before the war broke out and the latest conflict is expected to exacerbate the situation.

The Palestinian economy was expected to continue operating well below its potential and growth was projected to hover at about 3 per cent in 2023, according to a World Bank report published in September, before the start of the war.

Given population growth trends, income per capita is also expected to stagnate, dragging down living standards, the Washington-based lender said at the time.

“As long as the hostilities continue, for sure, the economic destruction continues, but … no less importantly, the productive capacity destruction, it goes on,” Mr Khalidi said.

“Productive capacity is not just having a factory and a workforce. It’s a whole chain and it’s a matter of links to suppliers and marketing and having people.”