A year of conflict between Israel and Hamas has resulted in a devastating impact on the economy in the occupied West Bank and Gaza, according to the International Monetary Fund (IMF). As of October 3, 2024, preliminary estimates indicate an 86 percent decline in Gaza's GDP during the first half of 2024, with dire socioeconomic conditions and a humanitarian crisis affecting the civilian population.
In the West Bank, the situation is similarly grim, with a reported 25 percent decline in GDP. The IMF's communications chief, Julie Kozack, highlighted the rising tensions in the Middle East, which add uncertainties to the global economy, despite previous signs of recovery from high inflation.
Financial markets have reacted, with the U.S. dollar strengthening and oil prices rising by around 2 percent amid fears of a wider conflict disrupting crude oil flows. Analysts, however, believe that the current U.S. crude oil inventories and OPEC's spare capacity may mitigate significant price increases at the fuel pump.
The conflict's impact extends to Israel, where the economy has faced challenges, including downgrades from three major rating agencies. Although Israeli GDP rebounded by 14 percent in early 2024 after a 21 percent contraction, growth has since slowed to 0.7 percent.
Furthermore, the intensifying conflict is exacerbating Lebanon's already fragile economic and social situation. Since the outbreak of hostilities on October 7, 2023, over 41,000 Palestinians have been killed, with significant casualties reported in Lebanon as well.
This situation remains a concern for the international community, with ongoing monitoring of the developments and their potential global implications.