The first quarter of the war: what it did to the Palestinian economy.
When the war on Gaza began in October 2023, its human cost was immediate and visible. Its economic cost took a little longer to appear in the data — but when the figures for the final quarter of 2023 came in, they described an economy in freefall.
The economy shrank by almost a third
In the last quarter of 2023, Palestine's real GDP fell by 29.5% compared with a year earlier. That headline number hides two very different realities:
- In the West Bank, the economy contracted by about 19%.
- In Gaza, it did not so much contract as collapse — down 81% — as infrastructure and the means of production were destroyed.
To put the human scale on it: income per person fell by roughly 31% across Palestine, to about $544 for the quarter. In Gaza, GDP per person fell to around $56.
Work disappeared
The sharpest blow for ordinary families was to work itself. Unemployment across Palestine jumped to 48% — nearly one in two people in the labour force out of work.
- In Gaza, unemployment reached about 75%.
- In the West Bank, it rose to around 32% — roughly 317,000 people out of work, up from about 129,000 just one quarter earlier.
A major driver was the sudden loss of jobs inside Israel. With Palestinian workers barred from reaching their workplaces, net income earned from outside the economy — mostly workers' wages — fell by an extraordinary 92% in a single quarter. For the tens of thousands of households that depended on that income, it vanished almost overnight.
Prices climbed as incomes fell
At the very moment families were losing their earnings, the cost of living rose. Inflation across Palestine reached 11.3% year-on-year — but, again, the average conceals the crisis:
- In the West Bank, prices rose about 5%.
- In Gaza, prices rose about 35%, as basic goods and food were prevented from entering in sufficient quantities, and what did arrive cost far more. Transport and shipping costs rose too, pushing up the price of imports across the whole of Palestine.
This is the cruellest part of an economic shock: income collapses and the cost of survival rises at the same time. Whatever savings a family had are drained quickly, and what fills the gap, all too often, is debt.
The damage was everywhere
No part of the economy was spared. Compared with a year earlier, agriculture fell about 39%, industry about 33%, construction about 38%, trade about 27%, and transport about 32%. Public finances came under severe strain as well: government revenues and grants dropped by 37%, partly because clearance revenues were withheld, and public debt climbed to about 22% of GDP.
Behind the numbers are households
It is easy to read figures like these as abstractions. They are not. A 92% fall in workers' income is a father who left for work one morning and was turned back at the crossing — and never went back. A 35% rise in prices in Gaza is a mother paying triple for flour. A jump from 129,000 to 317,000 unemployed in the West Bank is a neighbourhood of families who, between one quarter and the next, lost the income they had been counting on.
Macroeconomic recovery, if and when it comes, will not automatically reach these families. A country's GDP can begin to climb again while a single household is still trapped under obligations it took on before the shock. That gap, between the economy "recovering" and a family actually being able to pay its bills again, is exactly where we work.
*Sources: Palestine Monetary Authority, Economic Developments Report, Q4 2023; Palestinian Central Bureau of Statistics.
