The ongoing conflict between Israel and Hamas has not only taken a devastating toll on the lives of innocent civilians, but it has also had a severe economic impact on the West Bank and Gaza. According to a report released by the UN, the gross domestic product (GDP) of the region has shrunk by 4.2% in the month since the fighting erupted, leading to an alarming increase in poverty for the local population. The report stated that approximately 400,000 people have been plunged into poverty as a direct result of the conflict.
This economic shock has been attributed to a variety of factors, including the total siege of Gaza, the destruction of capital, forced displacement, and restrictions on the movement of people and goods in the West Bank. If the conflict continues for a second month, the UN projected that the Palestinian GDP, which was $20.4 billion before the war started, would drop by 8.4%, resulting in a loss of $1.7 billion. The report also warned that if the conflict extends to a third month, the loss would rise to 12.2% of GDP, or $2.5 billion, leading to an even larger increase in poverty, affecting over 660,000 people.
The negative impact on the GDP is expected to be a result of reduced trade, capital inflows, and future investment and productivity, as well as higher production costs and greater overall insecurity. These effects are predicted to have long-lasting consequences, with potential implications for years to come. Additionally, the report highlighted that total investment is expected to decline by up to 15.3%, and both total exports and imports are expected to decrease by 13.2% and 4%, respectively, compared to pre-war estimates for 2023.
The UN also warned of the potential wider regional and global repercussions of the ongoing conflict. It stated that the war has the potential to impact oil and gas prices, which have already seen moderate increases. Further escalation of the conflict could lead to substantial price surges, resulting in elevated production and transport costs, and ultimately higher inflation. This could have a ripple effect on the global economy, creating additional challenges and instability across several regions.
In conclusion, the economic consequences of the ongoing conflict between Israel and Hamas are dire, with the potential to have lasting effects on the region and the global economy. It is essential for both parties involved to prioritize the well-being of civilians and work towards a peaceful resolution to minimize the economic and humanitarian toll of the conflict.