As the economic scale of the destruction caused by the war in Gaza grows, UNCTAD’s latest report on the Palestinian economy estimates the region’s recovery and reconstruction needs at $71.5 billion. The report says this amount could increase further if additional damage is recorded.
The report says the Palestinian economy and public finances are under severe pressure. While Gaza’s economic collapse has deepened, restrictions on economic activity have also increased in the occupied West Bank.
Destruction and production losses in Gaza
The report cites a rapid damage and needs assessment conducted by the World Bank, the European Union and the United Nations, estimating that by the beginning of 2026, damage to Gaza’s physical infrastructure had reached $35.2 billion and economic and social losses had reached $22.7 billion.
Ninety-two percent of economic businesses in Gaza have been damaged or destroyed since October 2023, the report says, while the unemployment rate has reached 78%. More than 90% of the working-age population is outside the labor force.
Gaza’s gross domestic product per capita stood at $212 in 2025, equivalent to approximately $0.58 per person per day and 17% of the 2022 level. Gaza’s share of Palestinian gross domestic product also fell from 17.4% before October 2023 to below 4% in 2025.
All production sectors in Gaza remained far below their 2022 levels, with agricultural and industrial output falling by 94% and construction output declining by 99%. Less than 1.5% of agricultural land remained accessible and undamaged, increasing dependence on humanitarian food aid.
Palestinian economy and public finances under pressure
UNCTAD’s report says 59 years of occupation have constrained the Palestinian economy, while structural and economic costs have risen sharply since October 2023. The Palestinian gross domestic product grew by 4.3% in 2025 following a sharp contraction in 2024, but remained 20% below its 2022 level.
Hundreds of thousands of jobs have been lost in the occupied Palestinian territory since October 2023, resulting in an estimated cumulative loss of $2.8 billion in labor income.
The report says the Palestinian government’s financial position has deteriorated sharply. Israel collects more than two-thirds of the Palestinian fiscal revenues on behalf of the Palestinian government. Customs and tax revenues due from May 2025 through mid-2026 were withheld in full, while cumulative deductions and withheld revenues between January 2019 and March 2026 exceeded $3.67 billion.
This amount represented 83% of the Palestinian Authority’s total net revenues in 2025. Excluding unpaid customs and tax revenues, the 2025 budget deficit was projected to equal 13% of gross domestic product; when these revenues were included as amounts owed to the Palestinian government, the ratio was projected at 6%.
Displacement increases in the West Bank
The report says access to land and natural resources has declined as illegal settlements have expanded in the West Bank. It states that 38 communities have been completely depopulated of Palestinians since 2023. Displacement cases recorded in the first quarter of 2026 exceeded the total recorded throughout 2025.
Health, education and public debt
Fiscal pressures have also constrained the delivery of essential services, with unpaid health-sector bills reaching $1.1 billion by the end of 2025. This has increased risks to the continuity of services provided by hospitals, civil society organizations and medicine suppliers.
Due to resource shortages in the West Bank, in-person schooling was limited to three days a week in 2025. The Palestinian government borrowed more from local banks to finance its budget deficit, and total public debt reached $4.8 billion in 2025 as debts to private-sector suppliers and the pension fund accumulated.
