The Israel-Hamas war has been catastrophic for the economy in Gaza and the West Bank, and only “durable peace” will improve the situation, the head of the International Monetary Fund (IMF) said on Sunday.
“The Palestinian economy’s dire outlook is worsening as the conflict persists,” managing director Kristalina Georgieva said at the World Governments Summit in Dubai.
“Economically, the impact of the conflict has been devastating,” Georgieva said.
The IMF chief explained that in Gaza, economic activity plummeted 80 percent from October to December and 22 percent in the West Bank.
The West Bank has been sharply affected by Israel’s withdrawal of 130,000 work permits, numerous checkpoints that have hampered transportation and reduced tourism, the territory being cut off from Gaza, and Israel’s withholding of tax revenue from the Palestinian Authority.
GDP is predicted to improve in the Middle East and North Africa compared to last year but will likely drop below earlier IMF projections due to the effect of the Israel-Hamas war.
The economies of neighboring countries such as Egypt and Lebanon have also been affected due to a loss of tourism connected to the war.
The IMF now predicts a 2.9 percent expansion of economies in the region, a decrease of half a percentage point compared to October projections.
Attacks by Houthi rebels in the Red Sea have also worsened the situation, causing “rising freight costs and reduced Red Sea transit volumes (which are) down by nearly 50 percent this year in our PortWatch data,” Georgieva said.
The Gaza Strip has been undergoing an intense Israeli offensive since October 7 following Hamas’s attack on Israel and more than 28,000 people have been killed in the territory.
