The Economics of Ruin: Can Gaza’s Market Be Rebuilt?

Gaza’s economy has long been defined by destruction and recovery — a repeating cycle that erases progress before it can mature. After two years of war, both physical and financial capital lie in ruins. The question facing policymakers and investors is no longer when Gaza can rebuild, but whether the conditions for rebuilding can still exist.

Even before the current conflict, Gaza’s unemployment rate hovered above forty-five percent — among the highest in the world. The blockade imposed in 2007 restricted exports and investment, shrinking the private sector and reducing GDP to a fraction of its early-2000s level. The World Bank described the local economy as “operating below subsistence.” Today, much of that fragile infrastructure is gone.

Preliminary damage assessments indicate that housing and infrastructure account for over half of total losses, with nearly ninety percent of small and medium businesses damaged or destroyed. Power lines are severed, water networks inoperable, and logistics routes blocked. Communications remain unreliable, forcing surviving enterprises to operate intermittently and at enormous cost.

According to the UN Development Programme, the physical damage in Gaza now exceeds seventy billion dollars. The estimate includes two million tons of debris and toxic waste contaminating the environment — a public health risk that could outlast the war itself. Without rapid cleanup and energy restoration, reconstruction cannot begin at scale.

Humanitarian agencies warn that the crisis has entered what they call “a pre-famine economy,” where shortages of fuel, food, and medicine paralyze all trade. The lack of a functioning port or airport makes Gaza uniquely dependent on political coordination for the delivery of even basic goods. Meanwhile, inflation has soared as local markets rely on smuggled imports.

International reconstruction talks are under way in New York and Geneva, led by UN and Arab League negotiators. The United States has proposed a multinational stabilization force — a joint civilian and security mission tasked with overseeing aid corridors and protecting critical reconstruction zones. Gulf nations, including the UAE and Qatar, have pledged to finance the early recovery phase through grants and energy infrastructure investments, though those pledges hinge on guarantees of access and security.

For private investors, the challenge is risk management. Insurers classify Gaza as “uninsurable” without international protection mechanisms, and reconstruction contractors require political assurances before mobilizing staff and equipment. Cement, rebar, and machinery all pass through controlled crossings, creating chronic delays. Skilled labor, meanwhile, remains scattered across refugee populations, limiting the pace of recovery.

Analysts say the reconstruction of Gaza could become the largest development project of the decade — if it happens at all. Economic models suggest that rebuilding essential utilities and housing would take more than ten years and require sustained annual funding exceeding five billion dollars. To succeed, those funds must flow through transparent, monitored systems insulated from corruption and political manipulation.

Yet the obstacle is not purely financial. It is structural. Without stable borders, predictable trade access, and credible governance, capital will remain idle. Donor fatigue is also growing: aid commitments pledged after the 2014 war largely went unmet, and many fear this cycle could repeat.

For Gaza to re-enter the global economy, it needs more than rebuilding — it needs reintegration. Access to regional trade routes, renewable energy projects, and microfinance systems could begin restoring liquidity and employment. Several economic advisers have proposed creating a “Gaza Reconstruction Authority,” modeled on postwar institutions in Lebanon and Kosovo, to coordinate funds and oversight under international mandate.

Reconstruction is, ultimately, a political decision disguised as an economic one. The numbers are vast, but the true barrier is continuity. Unless policy provides sustained access and transparent management, investment will stall, aid will drain away, and Gaza’s economy will remain what it has been for decades: a ledger of ruins waiting for stability to return.