IMF Chief Highlights Economic Devastation in Palestinian Territories Due to Israel-Hamas Conflict
The ongoing conflict between Israel and Hamas has wrought severe economic ramifications on the Palestinian territories, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF). Speaking at the World Governments Summit in Dubai, Georgieva emphasized the devastating impact the war has had on the region’s economy and called for a durable peace as the only viable solution.
“The conflict’s persistence is further deteriorating the already dire economic outlook for the Palestinian territories,” Georgieva stated, underscoring the immediate need for a political resolution to fundamentally transform the situation. She highlighted the drastic economic downturn experienced in Gaza and the West Bank as a direct consequence of the conflict.
In her address, Georgieva revealed that from October to December, the economy in Gaza plummeted by 80% compared to the previous year, while the West Bank witnessed a 22% drop in economic activity. These stark figures reflect the extensive damage inflicted on the Palestinian territories due to the conflict.
The economic struggles have been exacerbated by various factors, including Israel’s revocation of 130,000 work permits, an increase in checkpoints that disrupt transportation, a significant loss in tourism revenue, the severance of Gaza from its surroundings, and Israel’s withholding of tax revenue collection meant for the Palestinian Authority.
Georgieva also noted the toll of the war on neighboring countries’ tourism industries, such as Egypt and Lebanon. Moreover, the conflict has prompted attacks on commercial shipping in the Red Sea by Yemen’s Huthi rebels, claiming solidarity with the Palestinians in Gaza. This has resulted in rising freight costs and a near 50% decrease in Red Sea transit volumes, further impacting the region’s economy.
The war, ignited by Hamas’s attack on southern Israel on October 7, which led to significant casualties, has seen Israel launch retaliatory measures with air strikes and a ground offensive in Gaza. These operations have resulted in thousands of casualties, primarily among women and children, in the Hamas-controlled territory, according to the local health ministry.
In her concluding remarks, Georgieva touched upon the broader economic outlook for the Middle East and North Africa (MENA) region. Despite expectations of growth improvement from the previous year, the IMF projects that the regional economies will expand by 2.9 percent this year. This forecast is down by half a percentage point from earlier estimates, primarily due to the ongoing Israel-Hamas war. This adjustment underscores the broader economic ramifications of the conflict, extending beyond the immediate areas of hostilities.
Georgieva’s comments at the World Government Summit spotlight the critical need for a lasting peace solution to address the economic and humanitarian crisis in the Palestinian territories and stabilize the wider MENA region’s economic prospects.
