Gaza Faces Economic Collapse without Aid

According to a report from the World Bank, Gaza’s employment rate is the highest in the world, and its economy will not survive without support from international donors and aid from Israel. The economy is struggling due to poor management, blockades and conflict.

According to a report from the World Bank, Gaza’s employment rate is the highest in the world, and its economy will not survive without support from international donors and aid from Israel. The economy is struggling due to poor management, blockades and conflict.

The report further stated that Gaza has a 43-percent employment rate, with youth unemployment amounting to 60 percent by the end of 2014. Real GDP for each individual dropped by a third in the past two decades, and overall poverty in the coastal strip stands at 39 percent. Gaza’s economy cannot support a working population, but the report stated that Gaza GDP would be four times greater if restrictions and blockades were lifted.

Israel and Egypt imposed blockades on the coastal region in response to governing body Hamas taking territory from President Mahmoud Abbas, an ally of the West. Supporters contend that the blockades are meant to stop Hamas from expanding, while critics argue that the blockades amount to collective punishment that causes undue suffering. Regardless of the politics, the report stated that the ongoing situation is unsustainable, and blockade restrictions must be eased to give the economy breathing room. Others are calling for a full lift of the blockades, which would allow the transport of goods and services. Further, the closing of smuggling tunnels to Egypt in October placed an added strain on the economy, with Hamas losing a vital taxing stream from the routes. Gaza’s economy lost $460 million from the tunnel closings, amounting to a 15-percent loss in GDP. Hamas also struggles to pay its workers, and increased spending measures became an additional burden on Gaza’s economic capacity.

Government mismanagement aside, the recent war between Israel and Gaza in 2014, which left over 2,000 Palestinians dead, is a contributing factor to Gaza’s impending fall. Thousands of buildings in the Gaza area were destroyed, and the onslaught particularly hurt various sectors of the economy, including agriculture and manufacturing. Gaza exports remain non-existent, and the manufacturing sector contracted by 60 percent. Gaza’s infrastructure problem, including poor sewage and electricity capacity, are other reasons why the economy continues to fall behind.

The report also mentioned the lack of aid and support from other donor nations that could have been used to rebuild Gaza after the 2014 conflict. Many countries had pledged aid at a summit in Cairo after last year’s war, but the international community has failed to deliver. Nations pledged $3.5 billion collectively for reconstruction efforts in Gaza, but only 27.5 percent of $1 billion has been issued thus far.