This decline reflects widespread disruption to all sectors of the economy, severely hampering production, investment, and overall economic stability.  

The 40-day incursion into the West Bank is expected to lead to an extra 0.7 percent decline in GDP if military operations do not impact Tulkarm and Nablus. However, if they are affected, the GDP is projected to decrease by an additional 0.5 percent in 2024, resulting in a total GDP contraction of 36.3 percent. 

The GDP of the West Bank contracted by 19 percent during the last quarter of 2023. This has been attributed to increased trade restrictions, violence, and infrastructure damage. 

On a similar note, the GDP was expected to decline by 8.7 percent in 2023 (equivalent to $1.7 billion).  

Raising unemployment
  

The UNDP and UNESCWA also expected unemployment to rise to 49.9 percent, up from 36.5 in 2023.  

The rise in unemployment will worsen the already challenging socioeconomic conditions, resulting in higher poverty rates and greater pressure on social services.  

Additionally, Israeli military operations in the West Bank are expected to increase the unemployment rate by an additional 0.4 percentage points, bringing the total to 50.3 percent. 

Consumption plummets
 

The consumption of the poorest households is expected to decrease to 13.7 percent in 2024, compared to 9.3 percent in 2023, while median households will experience a much sharper decline, from 18.3 percent to 41.4 percent. 

Lastly, the richest households are not spared, with their consumption projected to decrease to 40.5 percent in 2024, compared to 17.2 percent in 2023. 

Challenges in the financial sector
  

The direct losses experienced by financial sector facilities in Gaza are estimated at over $14 million.  

Moreover, the banking portfolio in Gaza is valued at approximately $1 billion, while the microfinance sector is around $54 million.  

Additionally, the increasing rate of returned cheques reaching 9 percent of the total cheque value in the first quarter of 2024 and up to 25 percent in some instances signals a rising macro-financial risk.  

The Palestine Monetary Authority (PMA) has put a moratorium on loans until September 2024, which has notably affected capital adequacy and liquidity.  

Gaza also suffers from cash liquidity. The banking system’s exposure to the public sector remains high, exceeding $ 2.5 billion in July 2024.  

The UN stressed that Israel's war on Gaza has decimated the Palestinian territory's economy, shrinking it to less than one-sixth of its 2022 level.  

Since the war started in Gaza on 7 October 2023, 82 percent of businesses there have been damaged or destroyed.