Palestinian Economy Facing Unprecedented Crisis: World Bank

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The war in the Palestinian territories is having a catastrophic impact on the local economy, the World Bank said Monday, noting that all sectors have been badly affected by Israel’s attacks.

Economic output in the Gaza Strip plummeted by 86 percent in the first half of this year, and by 23 percent in the West Bank, according to recent Bank data, leaving the Palestinian economy on track to contract by 26 percent in inflation-adjusted terms this year.

“The ongoing conflict in the Middle East continues to have a catastrophic impact on the Palestinian economy, pushing the territories into a crisis of unprecedented magnitude,” the bank said in a statement.

“The continuation of the hostilities has led to a sharp reduction in economic output and a collapse of basic services in both the West Bank and Gaza, amid skyrocketing poverty across the territories,” it added.

The war in Gaza was sparked by Hamas’s October 7, 2023 attack on Israel that resulted in the deaths of 1,208 people, mostly civilians, according to an AFP tally of Israeli official figures.

Since then, Israel’s retaliatory offensive has killed at least 44,976 people in Gaza, a majority of them civilians, according to figures from the Hamas-run territory’s health ministry that the United Nations considers reliable.

Violence has also spread to the occupied West Bank, where much of the growth in the Palestinian economy took place before the war began.

Inflation in Gaza rose 300 percent in the 12 months to October, with food prices surging by 440 percent, and energy prices by more than 200 percent due to major supply disruptions and the difficulty of getting food aid to people in need, the Bank said.

As a result, 91 percent of Gaza’s population “is on the brink of acute food insecurity,” the Bank said, citing a recent report, adding that 875,000 people faced “emergency levels of food insecurity,” while 345,000 were at “catastrophic” levels.

More broadly, all the basic structures of Gazan society have been destroyed: communications networks have been almost entirely destroyed, despite the efforts of local operators to maintain connectivity.

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