Gaza Economy Faces Historic Contraction as War Erodes Foundations

The economic fallout of the war that began on October 7 has pushed the Gaza Strip toward an unprecedented contraction, with consequences extending far beyond direct physical damage.

The downturn has struck at the foundations of local production. Rather than a temporary disruption to economic activity, it represents a deep structural decline in the economy’s ability to function and recover.

The labour market has also been severely weakened. The erosion of both productive capacity and employment structures leaves Gaza facing challenges that cannot be addressed through the repair of damaged buildings alone.

The scale of the contraction has erased decades of development, reversing accumulated economic progress and undermining the foundations on which future growth would depend.

Restoring Gaza’s economy will therefore require more than physical reconstruction. Rebuilding the capacity to produce and work will be central to overcoming the war’s deeper economic legacy.