IMF reports Israel-Hamas conflict slashes Gaza’s GDP by nearly 90%

A year of conflict between Israel and Hamas has resulted in a “devastating impact on the economy” in the occupied West Bank and Gaza, the IMF said on Thursday, including a nearly 90 per cent drop in Gaza’s GDP.

“Preliminary official estimates indicate an 86 per cent decline in GDP in the first half of 2024” in Gaza, said International Monetary Fund communications chief Julie Kozack.

She added that Gaza’s “civilian population faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid delivery.”

In the West Bank, “already grim prospects have further deteriorated, and preliminary official data indicate a 25 per cent decline in GDP in the first half of 2024,” Kozack told reporters at a regular briefing.

Israel’s economy has also been battered by the war, with three main ratings agencies downgrading its debt.

After shrinking by 21 per cent in the fourth quarter of 2023, Israeli GDP rebounded by 14 per cent in the first three months this year, official data showed. But growth turned sluggish in the second quarter at 0.7 per cent.

Kozack also noted that “in Lebanon, the recent intensification of the conflict is exacerbating the country’s already fragile macroeconomic and social situation.” “We’re closely monitoring the situation, and this is a situation of great concern and very high uncertainty,” she added.

Hezbollah began exchanging cross-border fire from Lebanon with Israel after Hamas’s October 7 attack. But the conflict has escalated after Israel announced this week that its troops had started “ground raids” into parts of southern Lebanon, after days of heavy bombardment of areas across the country where the group holds sway.

The bombing has killed more than 1,000 people, according to Lebanon’s health ministry, and forced hundreds of thousands to flee their homes.

Iran launched around 200 rockets in a direct missile attack on Israel on Tuesday, prompting Netanyahu to warn that Tehran would pay.

Iran said it was in retaliation for the killing of Hassan Nasrallah, the leader of Hezbollah, in a massive bombing in south Beirut.

US President Joe Biden said he was discussing possible Israeli strikes on Iranian oil facilities, in comments that sent oil prices spiking Thursday just a month before the US presidential election.