Gaza Three Years After the War: Destruction Continues and the Economy Faces the Unknown

Author: Dr. Maher Taysir Al-Tabaa

Three years after the outbreak of the war in the Gaza Strip in October 2023, the repercussions of the war continue to cast heavy shadows over various aspects of life, while the Palestinian economy in the sector faces one of the most complex and difficult economic crises in recent decades of its modern history.

The war not only resulted in human losses and widespread destruction of homes, facilities, and infrastructure, but also affected the components of economic and productive activity, leading to the disruption of the trade, industry, agriculture, and services sectors, the destruction of physical capital, and the loss of a large number of citizens' sources of income and jobs.

The latest international estimates confirm the magnitude of the economic disaster; the rapid final assessment of damages and needs in Gaza, issued by the United Nations, the European Union, and the World Bank in April 2026, estimated the material damages at approximately $35.2 billion, and the economic and social losses at about $22.7 billion, while the needs for recovery and reconstruction reached approximately $71.4 billion over ten years, including $26 billion during the first 18 months to restore basic services, rebuild vital infrastructure, and support economic recovery. Estimates also indicate that the Gaza economy has contracted by about 84% compared to what it was before the war.

An almost halted economy.

Despite some signs of economic activity, the economy in the Gaza Strip remains far from returning to normal. The World Bank indicates that real GDP in Gaza rose by more than 30% in 2025; however, this largely reflects the impact of a low comparison base following the historic contraction of 83% in 2024, rather than a genuine economic recovery. Additionally, most productive sectors remain nearly stagnant, with limited activity in trade and some services.

Unemployment and Loss of Income Sources

The war has led to a widespread collapse in the labor market, and the loss of jobs and sources of income has become one of the most prominent challenges facing families in the Gaza Strip.

According to the World Bank, unemployment in Gaza reached about 78% in 2025, an unprecedented level that reflects the extent of the collapse affecting the labor market and the private sector.

Unemployment does not merely represent a loss of monthly income; it also means a loss of purchasing power, a decline in domestic demand, the cessation of thousands of business activities, and a weakening of the entire economic cycle.

The private sector.. the biggest victim

The private sector is considered one of the most affected sectors by the war, as commercial, industrial, agricultural, and service facilities have suffered extensive damage, in addition to the loss of inventory, equipment, machinery, and means of transportation.

Moreover, many facilities that have not been directly destroyed face difficulties in operating due to a shortage of energy, raw materials, spare parts, and liquidity, as well as weak local demand.

The movement of crossings indicates that most of the imports that entered the Gaza Strip during the year following the end of the war are primarily consumer goods, with Israel allowing the entry of about 200 types of goods, compared to more than 10,000 types that used to enter the Gaza Strip before the outbreak of the genocide war in October 2023. What was allowed to enter was limited to about 73,000 trucks, of which about 36,000 were aid trucks, out of more than 200,000 trucks that were supposed to enter, according to the agreement to end the war, with a compliance rate of about 30%.

Israel has also restricted the supply of goods to only 13 Palestinian traders compared to more than 2,000 traders and importers who used to bring goods into the Gaza Strip before the war, and through them, it determines the type and quantity of incoming goods and their amounts. Here lies one of the fundamental problems, which is that it is not possible to build a sustainable economy relying solely on consumer goods; rather, it is essential to introduce production requirements, restart factories and economic facilities, and all the necessities for reconstruction.

Prices and Purchasing Power

The markets have witnessed sharp fluctuations in prices during the years of war due to limited supply, rising transportation and operating costs, and the difficulty of introducing many goods, as well as the complete prohibition of many goods.

Data from the Palestinian Central Bureau of Statistics shows the extent of the price shock; the Consumer Price Index in the Gaza Strip rose by 237.98% during 2024, and then continued to rise in 2025 by 21.93%, bringing the price index in Gaza to 470.62% in 2025, compared to 114.20% in 2023. Even with some relative stability in prices recorded during 2026, the overall price level averaged around 200% of pre-October 2023 levels.

Some goods, such as smartphones, batteries, solar energy supplies, mineral oils, and spare parts, have seen price increases ranging from 500% to 5000%.

In light of declining incomes and rising unemployment, the purchasing power of families has become extremely limited, which in turn leads to weak demand for goods and services, and weakens the ability of traders and businesses to continue.

Energy and liquidity crisis

The economy cannot function without electricity and energy, and a large part of the essential services in Gaza relies on generators, making the availability of fuel, oils, and spare parts an economic and humanitarian issue at the same time.

In September 2026, the United Nations indicated that the shortage of engine oil and spare parts affects water, sanitation, health services, and waste management, as large quantities of engine oil were still awaiting the necessary approvals for entry.

The price of electricity per kilo has risen from 0.5 shekels from the electricity distribution company and 4 shekels from street generators to 30 shekels per kilo, which has burdened the citizens.

The cash liquidity crisis remains one of the significant challenges facing citizens and traders, which increases the importance of expanding electronic payment and e-wallets, as they are one of the tools that can help sustain part of the economic activity and reduce reliance on cash.

Reconstruction.. From Relief to Production

What is required in the next phase is a gradual transition from the emergency humanitarian response model to the economic recovery and production model.

Food and relief assistance are essential to save the lives of citizens, but they alone cannot build a sustainable economy.

The economy needs factories, farms, shops, transportation, energy, financing, markets, and job opportunities.

Therefore, the reconstruction plan must include a clear program to reactivate the private sector, compensate affected establishments, provide easy financing, rebuild supply chains, and support small and medium-sized enterprises.

The private sector is a key partner in reconstruction.

The private sector should not just be a recipient of aid and compensation, but a fundamental partner in the reconstruction process, as business owners possess the expertise and knowledge of markets, consumer needs, and supply chains. Additionally, the private sector represents one of the most important sources of job opportunities and economic activity.

From here comes the importance of involving commercial and industrial chambers and private sector institutions in developing economic recovery plans, setting priorities, and monitoring the implementation of reconstruction projects.

Conclusion

Three years after the October War, the issue of Gaza is no longer just about rebuilding destroyed homes and facilities, but has become about rebuilding an entire economy that has lost a significant part of its productive capacity.

The figures related to the extent of damage, rubble, losses, needs, and costs of reconstruction indicate that the road to recovery is long, and what is required is not only injecting funds but also providing the environment that allows for the transformation of these funds into productive projects, job opportunities, investments, and economic growth.

The reconstruction of Gaza must be a reconstruction of the human, economy, and infrastructure together, and the private sector must be a key partner in this process.

After three years of war, the real challenge for everyone is to move from the stage of mere survival to the stage of recovery, from reliance on aid to restoring production, and from rebuilding what was destroyed to building a more resilient and sustainable economy.

Gaza does not only need to rebuild what the war has destroyed, but it also needs to rebuild its economy, job opportunities, sources of income, and the future of its generations.

The most important question remains... When will the real and serious reconstruction process for the Gaza Strip begin?