Live updates: Follow the latest on Israel-Gaza
Gaza must prioritise a robust development blueprint to rebuild its economy, which will require up to $50 billion over the next decade for reconstruction, analysts say.
Authorities in the enclave must address the infrastructure, housing and economic needs of its residents to ensure a sustainable recovery, they say.
“As to the reconstruction process of Gaza … it requires as much as $40 [billion] to $50 billion over at least 10 years of work,” Naser Mufrej, professor of finance and economics at the Arab American University in Ramallah, tells The National.
“The smoothness and time of completion of this process require three preconditions: first, sufficient international funding, second, ending of Israeli siege, and third, unified and effective management of this endeavour.”
On Wednesday, Israel and Hamas agreed to a six-week pause in fighting, and the exchange of hostages and Palestinian detainees after 15 months of devastating war that killed tens of thousands of people and crippled Gaza's economy.
As part of the deal, Hamas will release 33 Israeli hostages in exchange for a number of Palestinian detainees held in Israeli jails, while Israeli forces will withdraw eastward away from densely populated residential areas to positions alongside the Palestinian side of the Gaza-Israel border.
The deal also provides for the return to home of Palestinians displaced by the war, and enabling the departure of the sick and wounded to receive treatment abroad, according to Qatari Prime Minister to Sheikh Mohammed bin Abdulrahman Al Thani.
The first phase includes the large-scale delivery and distribution of humanitarian assistance in Gaza, as well as the rehabilitation of hospitals, health centres and bakeries. It also includes the entry of machinery to remove rubble, as well as fuel and a large number of caravans and tents to house those who have lost their homes in the war.
Analysts say a crucial step to take following the ceasefire will be the creation of a comprehensive urban reconstruction plan.
“I believe the most important immediate measure, aside from a sustainable ceasefire and a permanent end of the war, is developing a detailed urban reconstruction plan and [taking] it to multilateral institutions,” says Nassib Ghobril, chief economist and head of the economic research and analysis department at Byblos Bank.
“The reconstruction needs are enormous and the financing needs are staggering, while the Palestinian Authority has almost no means to contribute to this effort. So the sources of financing will depend on a clear, comprehensive and detailed development and reconstruction plan; while the flow of funds will depend on the efficient and transparent use of the funds based on governance principles,” he tells The National.
Economic crisis of 'unprecedented magnitude'
More than 46,700 people have been killed in the Israeli bombings, with over twice that number injured, according to Gaza's health authorities. Most of the Palestinian enclave's 2.3 million people have been displaced and huge areas of built-up regions reduced to rubble.
The Gaza war has plunged the Palestine economy into a crisis of “unprecedented magnitude”, the World Bank warned last month.
The real gross domestic product of the Palestinian territories was projected by the World Bank to have contracted by 26 per cent last year in the steepest decline in economic activity in two decades.
In the first half of 2024, Gaza’s economy shrunk by 86 per cent while the West Bank's economy contracted by 23 per cent. In Gaza, annual per capita income has fallen from $2,328 in 1994 to less than $200 as of December, it said.
The war has destroyed infrastructure and created surging unemployment, soaring prices and the collapse of essential services in the Palestinian territories.
The World Bank report estimated that 66 per cent of businesses in Gaza have been wiped out, while 22 per cent have been damaged, leaving the commercial sector on the verge of collapse.
The war's ripple effects have devastated the labour market, especially in Gaza, where unemployment has surged more than 80 per cent.
Gaza suffered about $18.5 billion of damage to critical infrastructure in the first four months of the Israeli bombardment, according to a joint report by the World Bank and the UN in April 2024.
Development in Gaza and the Israeli-occupied West Bank could be set back decades according to a UN report in October.
The United Nations Development Programme report, titled Gaza War: Expected Socioeconomic Impacts On The State of Palestine, says the State of Palestine lost $7.1 billion in real GDP due to the war, reiterating previous estimates of $18.5 billion in damage to Gaza.
“Reconstruction of Gaza is likely to proceed slowly given significant costs and probable delays in securing funding, limiting Palestinian economic recovery,” S&P Global Market Intelligence said in a separate report on Thursday.
Raja Khalidi, director general of the Palestine Economic Policy Research Institute, says Palestinian government and the international community “need to quickly agree transparent, inclusive and efficient institutional and funding modalities and commitments” to rebuild Gaza strip and its economy.
“If a vigorous flow of construction materials and equipment can flow into Gaza, that will allow by the end of this year for reconstruction to begin in earnest,” Mr Khalidi says.
However, reconstruction of Gaza strip will be a “multibillion dollar effort” and will take up to 10 years to rebuild because of massive destruction in the narrow enclave, he adds.
