Impact of Gaza War on Nearby Arab Economies: UN Study Predicts 2.3% GDP Reduction

The economic cost of the Israel-Hamas war in Gaza on Arab neighbors Lebanon, Egypt and Jordan could rise to at least $10 billion this year and push more than 230,000 into poverty, according to a UN study.

The war has come at a time when the three Arab countries face a struggle with fiscal pressures, slow growth and steep unemployment and has deterred much-needed investment and hit consumption and trade. Lebanon is in deep economic crisis.

The study, commissioned by the United Nations Development Programme, said the cost of the war for the three states in terms of loss of GDP may amount to $10.3 billion or 2.3 %, and could double if it lasts another six months.

“This is a massive impact,” Abdallah Al Dardari, UN assistant secretary-general and UNDP’s Director of the Regional Bureau for Arab States (RBAS) who lead the study told Reuters.

“The crisis was a bomb in a already fragile regional situation.. It soured sentiment with fear of what could happen and where things are going,” he added.

Israeli soldiers at the Jabalya refugee camp, in the northern Gaza Strip, during an Israeli military operation in the Gaza Strip, December 12, 2023 (credit: Chaim Goldberg/Flash90)

Experts are already preparing for post-war reconstruction

Israel launched its campaign to annihilate Hamas after the group attacked Israel on October 7, killing 1,200 Israelis, mostly civilians, and taking 240 people hostage.

Since then, Israeli forces have laid much of Gaza to waste, with more than 18,000 people killed, according to Gaza’s Hamas-governed health authorities, and many thousands more feared lost in the rubble or beyond the reach of ambulances.


Dardari said the scale of destruction in Gaza within such a brief time was unprecedented since World War Two.

“To lose 45-50 % of all housing in one month of fighting… We have never seen anything like this… the relationship between destruction level and time, it’s unique,” Al Dardari added.

Dardari, an economist and expert on reconstruction in conflict zones, said his team of experts were already reaching out to development funds and multilateral financial institutions on post-war reconstruction scenarios for Gaza.