Washington:
The war between Israel and Hamas in Gaza is having a serious impact on the Palestinian economy, according to the World Bank, which now estimates a sharp economic contraction this year and next.
The conflict, sparked by Hamas' cross-border attacks on October 7 that killed 1,200 people and returned some 240 hostages to Gaza, according to Israeli figures, is now in its third month.
The human toll of Israel's fierce response has been extreme: More than 18,400 people have been killed in Gaza, most of them women and children, according to the Hamas-led Health Ministry.
The UN estimates that 1.9 million of Gaza's 2.4 million residents have been displaced by the war, half of them children, as Israel's overwhelming aerial bombardment in the days after October 7 was then accompanied by a ground invasion targeting the destruction of Hamas.
In addition to the direct human consequences, the conflict between Israel and Hamas has also “had a serious impact on the Palestinian economy,” the World Bank said in a statement published on Tuesday.
According to the Palestinian Central Bureau of Statistics, Gaza's contribution to the overall Palestinian economy, which includes the West Bank, had already shrunk from about 36 percent in 2005 to just 17 percent last year.
Israel's fierce response to the Hamas attacks on October 7, along with the closure of its borders to Palestinian workers from both Gaza and the West Bank, is likely to have serious consequences for the Palestinian economy, according to the Bank.
Despite Gaza's small economic contribution, the World Bank now expects the overall Palestinian economy to shrink by 3.7 percent this year, a sharp decline from its pre-war forecast of a 3.2 percent increase.
Next year the situation is expected to be even worse.
While the World Bank previously expected growth of 3.0 percent in 2024, it now expects an overall contraction of 6.0 percent – assuming the severity of the conflict decreases next year.
If the war continues, the economic consequences could worsen further.
In response to the conflict, the World Bank has announced some financial support to meet the immediate needs of the Gaza population.
On Tuesday, the development lender announced another $20 million in funds for medical care, humanitarian needs and financing for food stamps and parcels in the besieged Palestinian territory, on top of the $15 million already delivered.
The package, part of which still needs board approval, would “provide emergency assistance to the affected people of Gaza,” the World Bank said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)