The Gaza Strip, long a symbol of resilience and resistance, has been pushed to the brink of total economic ruin. A narrow coastal territory home to over 2.2 million Palestinians, Gaza's economy has crumbled under the weight of repeated military assaults, suffocating blockades, and deliberate economic strangulation. The current war, among the deadliest and most prolonged in recent memory, has exacerbated every existing crisis and ushered in a humanitarian and economic catastrophe of historic proportions.



Historical Context: An Economy Under Siege

To understand the scale of Gaza’s economic collapse, it is essential to trace the evolution of its economic life before the current war. Since the imposition of the Israeli-Egyptian blockade in 2007 following Hamas’ takeover, Gaza’s economy has been throttled by restrictions on movement, trade, and access to basic goods. Prior to this, Gaza was known for agriculture, small-scale industries, and trade through the Erez and Rafah crossings.

The blockade severely limited imports and exports, dismantling entire sectors. Industrial zones were rendered defunct, and access to raw materials became almost impossible. Farmers could not reach their lands along the buffer zones, fishermen were shot at for venturing beyond 6 nautical miles, and a once-thriving construction industry dried up due to restrictions on cement and steel. Even so, Gazans found ways to survive through smuggling tunnels, local innovation, and humanitarian aid.

War as an Economic Weapon

The latest war, beginning in late 2023 and continuing with waves of escalation into 2025, has brought Gaza’s economy to its knees. Israel's comprehensive bombing campaign has targeted infrastructure not just of military relevance but critical civilian and economic facilities: factories, markets, banks, roads, and even bakeries.

The deliberate targeting of economic infrastructure is a form of collective punishment. According to UN reports and independent investigations, over 70% of Gaza’s factories have been destroyed or rendered inoperable. Warehouses containing food and humanitarian supplies were bombed. The destruction of Gaza’s only power plant, telecommunications systems, and water facilities further paralyzed economic activity.

Even before the war, Gaza’s unemployment rate hovered around 45%, with youth unemployment above 60%. These numbers have now surged to unprecedented levels, as hundreds of thousands of jobs have disappeared overnight. Entire sectors—construction, services, manufacturing, agriculture—have been obliterated.

The Collapse of the Informal Economy

In Gaza, the informal economy—small shops, street vendors, artisanal trades—played a vital role in sustaining families. With formal employment limited due to the blockade, this grey economy served as a lifeline. Today, it lies in ruins. Markets have been bombed or abandoned. Streets are either rubble or too dangerous for commercial activity. Supply chains have been severed, cash is scarce, and bank branches have shut down.

Currency itself has become a rarity. With no functioning banks and limited aid flow, Gazans have resorted to barter systems in some areas. Families trade food for fuel, clothes for medicine, and personal possessions for water. The devaluation of the shekel’s utility in Gaza has created a barter-based subsistence economy, dragging the enclave centuries back in economic function.

Food Insecurity and Agricultural Devastation

One of the most tragic aspects of Gaza’s economic collapse is the destruction of agriculture, traditionally a backbone of local livelihood and sustenance. Gaza’s fertile land once produced olives, citrus, strawberries, and a variety of vegetables. Now, fields lie scorched, irrigation systems shattered, and greenhouses bombed.

Livestock have been killed in bombings or died from starvation. Beekeepers report losing entire colonies due to air pollution, displacement, and lack of care. Fishing, once a major source of protein and employment, is impossible under constant naval bombardment and a destroyed port infrastructure.

The result: famine-like conditions. According to the World Food Programme, over 90% of Gaza’s population now experiences acute food insecurity. Malnutrition among children is rampant. The collapse of the agricultural economy means even local food production cannot alleviate the crisis. Dependency on humanitarian aid has become total—but even this aid is often blocked, bombed, or delayed.

Infrastructure Destruction and Long-Term Economic Fallout

The destruction of economic infrastructure has implications that will last generations. Roads and bridges are not just physical pathways but vital economic arteries. Gaza’s transportation system has been decimated, paralyzing trade and the delivery of humanitarian aid.

Water and sanitation systems have been systematically targeted. Without clean water, not only does disease spread rapidly, but agriculture and industry are rendered impossible. Gaza’s only desalination plants are non-functional. Power shortages have crippled hospitals, factories, and homes. Without electricity, economic activity halts, digital communication collapses, and every facet of modern life becomes a struggle.

Telecommunications blackouts, often deliberate during military operations, cut off markets, prevent banking, and halt coordination of supply chains. The intentional dismantling of economic connectivity is a form of warfare in itself—an attack on the social fabric and the very possibility of recovery.

Human Capital: A Lost Generation

Gaza’s most valuable resource—its people—is being drained of hope, skills, and opportunity. The war has disproportionately affected youth and women, groups already marginalized economically. Universities and schools have been bombed. Hospitals have become shelters or mortuaries. Teachers, doctors, engineers—many have fled, died, or are struggling to survive.

Brain drain, once a concern due to limited professional opportunities, has become mass incapacitation. Future generations are growing up without education, malnourished, and traumatized. The economic cost of losing an educated, healthy, and skilled population is incalculable.

In the long term, rebuilding Gaza’s economy will require not just physical infrastructure but also a massive investment in human capital—education, health, vocational training, and psychological support. As of now, the war is wiping out decades of potential in mere months.

The Role of International Aid and Limitations

Humanitarian aid has kept Gaza from descending into total collapse, but it is insufficient and inconsistent. Donor fatigue, political restrictions, and logistical challenges mean aid is a lifeline stretched thin. Aid organizations report running out of fuel, medical supplies, and food stocks. Convoys are often targeted or delayed by military procedures.

Moreover, aid is not a substitute for economic sovereignty. Gaza’s economy cannot be built on charity. What is needed is the freedom to trade, work, and produce. Without lifting the blockade and allowing reconstruction, international aid becomes a Band-Aid on a severed artery.

Economic Warfare and International Complicity

Gaza’s economic collapse is not an accident—it is the result of a deliberate strategy of economic warfare. Israel’s policies of siege, targeted destruction, and movement restrictions are designed to keep Gaza “on the brink of collapse,” as one Israeli official once admitted. These policies are often supported, funded, or tolerated by international powers.

The destruction of civilian infrastructure, the blockade on dual-use goods, and the denial of reconstruction materials all violate international humanitarian law. Yet, the global response has largely been one of silence or complicity. The economic strangulation of Gaza is a political act, and reversing it will require political courage.

The Private Sector’s Erasure

Before the war, Gaza had a modest but resilient private sector. Small businesses, from textile shops to tech startups, attempted to build a future despite all odds. Today, most of these businesses have been destroyed. The war has effectively erased the private sector.

Business owners have lost their capital, equipment, and facilities. Financial systems are down. Investment is impossible in a war zone. Insurance does not exist. Without a private sector, there can be no sustainable recovery. International donors and NGOs must prioritize not only humanitarian aid but also economic revitalization—microloans, rebuilding factories, and enabling trade.

Prospects for Recovery: Rebuilding or Reinventing?

Can Gaza’s economy recover? The answer depends on political will more than economic capability. The Palestinian people have shown resilience beyond imagination. If given space, resources, and freedom, they can rebuild. But rebuilding an economy from ashes requires more than money—it needs justice, autonomy, and security.

Recovery must be holistic. Rebuilding homes without jobs, or factories without fuel, leads to dependency. Gaza needs:

  • Unrestricted access to reconstruction materials
  • Investment in infrastructure
  • Revitalization of agriculture and industry
  • Opening of borders for trade
  • Restoring education and healthcare
  • Psychological support for the war-traumatized population

International actors must hold Israel accountable for economic destruction and compel the lifting of the blockade. Otherwise, Gaza will remain in a cycle of rebuilding and bombing—a purgatory of perpetual ruin.

A Moral and Economic Imperative

Gaza’s economic collapse is not just a Palestinian tragedy—it is a moral indictment of the international community. Economic devastation on this scale threatens not just regional stability but global conscience. Allowing an entire population to suffer deliberate economic destruction in the 21st century is an affront to every principle of human rights and development.

Gaza does not lack the capacity to thrive. It lacks the freedom to live. Rebuilding Gaza’s economy is not only possible—it is necessary. But it cannot happen without justice. The war’s fallout is not only debris and death—it is lost futures, stolen livelihoods, and a region’s strangled potential.

Unless the world acts—not with words but with pressure, policy, and protection—Gaza will remain a monument to economic strangulation. And history will not be kind to those who watched a people starve, not for lack of food, but for lack of freedom.