Gaza war hits neighboring Arab economies, could cut GDP by 2.3% – UN study

The economic cost of the Israel-Hamas war in Gaza on Arab neighbours Lebanon, Egypt, and Jordan could rise to at least 10 billion dollars this year and push more than 230,000 people into poverty, according to a UN study.

The war has come as the three Arab countries face a struggle with fiscal pressures, slow growth, and steep unemployment, and it has deterred much-needed investment as well as hitting consumption and trade.

Lebanon is in a deep economic crisis.

The study, commissioned by the United Nations Development Programme, said the cost of the conflict for the three states in terms of loss of GDP may amount to 10.3 billion dollars or 2.3 per cent, and could double if it lasts another six months.

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“This is a massive impact,” Abdallah Al Dardari, UN assistant secretary-general and UNDP’s Director of the Regional Bureau for Arab States (RBAS) who led the study told Reuters.

“The crisis was a bomb in an already fragile regional situation. It soured sentiment with fear of what could happen and where things are going,” he said.

Israel launched its campaign to annihilate the Hamas militant group that controls Gaza after fighters stormed across the border on October 7, killing 1,200 Israelis, mostly civilians, and seizing 240 hostages, according to Israel.

Since then, Israeli forces have besieged the enclave and laid much of it to waste, with more than 18,000 people confirmed killed, according to Palestinian health authorities, and many thousands feared lost in the rubble or beyond the reach of ambulances.

Dardari said the scale of destruction in Gaza within such a brief time was unprecedented since World War II.

“To lose 45-50 per cent of all housing in one month of fighting … We have never seen anything like this … the relationship between destruction level and time, it’s unique,” Al Dardari said.

The mass displacement of almost 80 per cent of Gaza’s population within such a short period eclipsed the more than decade-old Syrian conflict, which sparked the world’s biggest refugee crisis.

“It took Syria five years of fighting to reach the same level of destruction that Gaza reached in one month,” said Dardari, a former minister for economic affairs in the Syrian government.

Dardari, an expert on reconstruction in conflict zones, said his team was already reaching out to development funds and multilateral financial institutions on post-war reconstruction scenarios for Gaza.

“We are not waiting until the battles end… this effort has begun,” Dardari said, without elaborating. (NAN)