Israel destroying Palestinian economy – UN

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According to a UN report, the conflict between Israel and Hamas has had a devastating economic impact on the West Bank and Gaza, where GDP has shrunk by 4.2% in the month since fighting erupted. It went on to say that 400,000 people fell into poverty during the same time period.

The “shock” to Palestinian economic activity has been severe, according to a document released on Thursday by the UN Development Programme and the Economic and Social Commission for Western Asia (ESCWA). It cited the total siege of Gaza, capital destruction, forced displacement, and restrictions on people and goods movement in the West Bank.

According to the UN, if the war lasts another month, Palestinian GDP, which was $20.4 billion before the war began, will fall by 8.4%, or $1.7 billion. If the conflict continues for a third month, the loss would rise to 12.2% of GDP, or $2.5 billion, pushing over 660,000 people into poverty.

Preliminary calculations indicate that a three-month war could result in a GDP loss of up to 15% when compared to the level projected for 2023 before the conflict.

The drop in GDP is expected to be caused by a decrease in trade, capital inflows, future investment, and productivity, as well as higher production costs – including transportation – and increased overall insecurity. The negative effects on potential output and productivity may last for a long time.

The ongoing conflict “raises the prospect of broader regional and global ramifications,” according to the UN. “In terms of potential regional and global consequences, the current war has the potential to be transmitted through oil and petrol prices, which have seen moderate increases thus far.” Further escalation could result in significant price increases, raising production and transportation costs and, ultimately, raising inflation,” the report concluded.