Gaza Economy Faces Historic Contraction as War Erodes Foundations

The economic fallout from the war that began on October 7 has pushed Gaza toward an unprecedented contraction, with damage extending far beyond the physical destruction of buildings and infrastructure.

The disruption has struck at the foundations of local production, undermining the economy’s capacity to generate output rather than simply leaving assets in need of repair.

Gaza’s labour market has also undergone a severe structural deterioration. The damage to both production and employment points to an economic crisis deeper than a temporary interruption of business activity.

The scale of the reversal has erased decades of development, leaving the local economy with weakened foundations for any eventual recovery.

Rebuilding will therefore involve more than restoring physical infrastructure. It will also require repairing the productive capacity and labour-market structures that underpin economic activity.