Case Analysis 09 November, 2023

Forecasting the Economic and Social Impacts of Israel’s War on Gaza

Raja Al-Khalidi

General Director of the Palestinian Economic Policy Research Institute - MAS.


As Israel pummels the Gaza Strip, inflicting enormous human casualties on the Palestinian people in full view of the world, the economic impact of the violence may seem a secondary issue. Yet the truth is that Israel sees the destruction of the economy as central to its efforts to crush any form of Palestinian resistance. Indeed, this is evident in the systematic destruction it is inflicting on Gaza.

acrobat Icon At this stage, with the Israeli offensive still ongoing, it is not possible to measure the cost of the war or estimate the value of the losses it could cause. However, this paper will attempt to sketch out some key primary impacts the war is likely to inflict on the Palestinian economy, along with their knock-on consequences. It will also examine the economic, financial and social shocks that have already taken place or are likely to come soon, for which preparations must be made. It will discuss the task of rebuilding Gaza and making the territory possible to inhabit after this catastrophe, taking into account Israeli and American statements on arrangements for “governance” on “the day after”. This spiky yet existential issue will be determined by the outcome of the war on the ground and the degree to which Israel achieves its stated aims of ending Hamas rule in Gaza, something that is impossible to predict at this stage.

To examine the various possible impacts of the war, we must distinguish between the economy of Gaza and that of the West Bank and neighbouring Palestinian communities (in East Jerusalem and inside the Green Line) which together are home to some seven million Palestinians. While these areas will undergo a string of similar shocks and suffer hostile and racist Israeli policies, there are also remain major differences between Gaza and the other areas of Palestine.