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Gaza’s Economy Could Take Decades to Recover, UN Trade Body Says

People search through the rubble of damaged buildings following an Israeli air strike on Palestinian houses, amid the ongoing conflict between Israel and the Palestinian group Hamas, in Rafah in the southern Gaza Strip December 12, 2023. (Reuters)
People search through the rubble of damaged buildings following an Israeli air strike on Palestinian houses, amid the ongoing conflict between Israel and the Palestinian group Hamas, in Rafah in the southern Gaza Strip December 12, 2023. (Reuters)
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Gaza’s Economy Could Take Decades to Recover, UN Trade Body Says

People search through the rubble of damaged buildings following an Israeli air strike on Palestinian houses, amid the ongoing conflict between Israel and the Palestinian group Hamas, in Rafah in the southern Gaza Strip December 12, 2023. (Reuters)
People search through the rubble of damaged buildings following an Israeli air strike on Palestinian houses, amid the ongoing conflict between Israel and the Palestinian group Hamas, in Rafah in the southern Gaza Strip December 12, 2023. (Reuters)

It could take until the closing years of the century for Gaza's economy to regain its pre-conflict size if hostilities in the Palestinian enclave were to cease immediately, the UN trade body said in a report published on Wednesday.

Israel's offensive in Gaza in the wake of attacks by Hamas gunmen on Oct. 7 have killed more than 26,000 people, according to local authorities, and decimated infrastructure and the livelihoods of its 2.3 million inhabitants.

The United Nations Conference on Trade and Development said the conflict had precipitated a 24% contraction in Gaza's GDP (gross domestic product) and a 26.1% drop in GDP per capita for all of 2023.

UNCTAD said that if the military operation were to end and reconstruction to start immediately - and if the growth trend seen in 2007-2022 persisted, at an annual average rate of 0.4% -- Gaza could restore its pre-conflict GDP levels in 2092.

At best, under a scenario that GDP could grow at 10% annually, it would still take Gaza's GDP per capita until 2035 to reach the level of 2006, before Israel in 2007 made permanent a land, sea and air blockade citing security concerns.

"It will take until 2092 for Gaza to go back to its 2022 level, which wasn't at all a good place for people in Gaza," said Rami Allazeh, an economist who works on the Occupied Palestinian Territories at UNCTAD.

"I think the main takeaway from the report is that the level of destruction that we're witnessing in Gaza is unprecedented. It's going to take a lot of efforts from the international community for the rebuilding and recovery in Gaza."

UNCTAD said that in order to recover following a previous Israeli military intervention in Gaza in 2014, the enclave needs stood at around $3.9 billion. Those needs would be significantly higher following the current conflict, it said.

"Given the level of destruction and the intensity of the damages we're witnessing currently in Gaza, and that the military operation is still ongoing, the number required for recovery in Gaza will be multiple times the $3.9 billion required after the 2014 war," Allazeh said.

Gaza's economy had been in a shambles even prior to the conflict due to the Israeli economic blockade, with the enclave's economy contracting 4.5% in the first three quarters of 2023, according to UNCTAD estimates.

Two-thirds of the population lived in poverty and 45% of the workforce were unemployed before the conflict. As of December, unemployment had surged to a staggering 79.3%, UNCTAD said.

"I don't think the international community or the people in Gaza can afford decades of humanitarian catastrophe," Allazeh said.

"Gaza needs to be part of the development agenda rather than being treated as a humanitarian case."

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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.