The ongoing Israel-Hamas war in Gaza is taking a heavy toll on the Palestinian economy, according to the World Bank. The conflict, which began with Hamas' cross-border attacks on October 7, has now entered its third month. The human cost has been devastating, with over 18,400 people in Gaza killed, the majority of whom are women and children. Additionally, the UN estimates that 1.9 million people, half of whom are children, have been displaced by the war. Beyond the immediate loss of life and displacement, the Israel-Hamas conflict has severely impacted the Palestinian economy.

Gaza's contribution to the overall Palestinian economy has already decreased from 36 percent in 2005 to just 17 percent last year. The closure of borders for Palestinian workers from both Gaza and the West Bank, along with Israel's fierce response to the Hamas attacks, is expected to further worsen the economic situation. The World Bank now projects that the overall Palestinian economy will contract by 3.7 percent this year, a significant decrease from the pre-war forecast of a 3.2 percent increase. Next year, the situation is expected to worsen even more, with an anticipated contraction of 6.0 percent.

However, this projection assumes that the severity of the conflict decreases in the coming year. If the war continues, the economic impact could be even more severe. To address the immediate needs of the population in Gaza, the World Bank has announced a support package worth $35 million. This package includes funds for medical care, humanitarian assistance, and financing for food vouchers and parcels. The World Bank's financial support aims to provide emergency relief for the affected people in Gaza. However, the package still requires board approval to be implemented fully.