The League of Arab States hosted the launch of the report, "The Gaza War: Projected Socio-Economic Impacts on the State of Palestine – October 2024 Update," prepared by the United Nations Development Programme (UNDP) and the United Nations Economic and Social Commission for Western Asia (ESCWA). The report forecasts a grim socio-economic outlook for the State of Palestine, with the poverty rate projected to surge to 74.3% in 2024, affecting 4.1 million citizens, including 2.61 million newly impoverished individuals. It also estimates a sharp contraction of 35.1% in GDP for 2024, compared to estimates absent the conflict, while the unemployment rate is expected to rise to 49.9%.
This updated assessment follows two previous reports published in November 2023 and May 2024. It delves into the scale and severity of deprivation by employing multidimensional poverty indicators and examines the potential paths to recovery in Palestine following a ceasefire. The report underscores that a comprehensive recovery and reconstruction strategy, which integrates humanitarian aid with targeted investments in rebuilding efforts, the lifting of economic restrictions, and the creation of favourable conditions for recovery, will be vital. If such efforts are unimpeded, the Palestinian economy could realign with national development goals by 2034.
The assessment explores three early recovery models, a term widely used by development and humanitarian organisations to refer to actions aimed at addressing and mitigating the impacts of crises. These actions encompass a broad spectrum, ranging from urgent efforts to restore basic services in the short term to long-term initiatives that enhance local capacities to withstand future crises.
In the first two models—the no early recovery model and the constrained early recovery model—the current stringent restrictions on Palestinian workers and the withholding of clearance revenues from the Palestinian Authority persist. The primary difference between these models lies in the level of humanitarian assistance provided: in the first model, aid remains at current levels, while in the second, it increases to $280 million annually. Both models, however, produce nearly identical outcomes, with recovery to pre-war levels projected to take at least a decade. This underscores the limited effectiveness of relying solely on humanitarian aid for the economic recovery of Palestine.
The third model, known as unrestricted recovery, envisions the lifting of restrictions on Palestinian workers, the return of withheld clearance revenues to the Palestinian Authority, and the allocation of an additional $290 million annually for early recovery, alongside the $280 million in humanitarian aid. This scenario leads to a 1% annual increase in productivity, allowing the Palestinian economy to recover and return to its development trajectory. Under this model, significant improvements in poverty rates, increased access to basic services for households, and a substantial reduction in unemployment are anticipated, with the unemployment rate expected to drop to 26%.
The assessment provides critical estimates on the development conditions in the State of Palestine, highlighting alarming setbacks in human development. By the end of 2024, development is expected to regress significantly, with human development indicators falling to levels not seen since their initial calculation for Palestine in 2004. To quantify this, the assessment employs linear reverse extrapolation, yielding the following projections:
- The Human Development Index (HDI) for the State of Palestine is anticipated to drop to 0.643, equivalent to the level observed in 2000, marking a 24-year setback in development.
- The HDI for Gaza is expected to plummet to 0.408, a level comparable to that of 1955, effectively erasing over 69 years of development progress.
- The HDI for the West Bank is projected to decline to 0.676, reflecting a 16-year setback, with further deterioration likely if military incursions into the West Bank continue to intensify.
- The war has also drastically exacerbated deprivation, as indicated by the Multidimensional Poverty Index (MPI).
- The MPI is projected to surge from 10.2% in 2017 to an estimated 30.1% in 2024 for the State of Palestine. The most heavily affected dimensions, where all indicators have significantly worsened, include housing conditions, access to services, and personal safety.
- Deprivation has escalated sharply in key MPI indicators such as freedom of movement, cash resources, unemployment, access to healthcare, and school enrollment. The assessment estimates that the proportion of people living in multidimensional poverty has more than doubled, rising from 24.1% to 55.4% during this period.
