Long road to reconstruction: Gaza’s humanitarian and economic outlook

By Olha Hembik | 2026-06-24

Massive craters, decimated roads and charred building facades are commonplace across Gaza, while humanitarian aid for the suffering population only occasionally appears.

In the wake of Hamas's attack on October 7, 2023, and Israel’s subsequent full-scale military campaign, this part of the Palestinian territories has become a humanitarian catastrophe, while the West Bank is experiencing its most drastic economic decline since record-keeping began.

Rebuilding the ruins will be a herculean task, but many say it will be easier than achieving peace and stability in the region.

Decades lost

On October 10, 2025, a ceasefire went into effect in the Gaza Strip between Israel and Hamas, the radical Palestinian Islamist movement backed by Iran.

It was brokered by U.S. President Donald Trump. While some residents returned to their homes, experts tallied the losses from the destruction.

The physical damage in the Gaza Strip is estimated to be $35.2 billion, while the economic and social losses add up to another $22.7 billion. Over the course of the conflict, entire sectors of the economy have been ravaged, including home building, healthcare, education, trade and agriculture. More than 371,000 housing units and more than half of all hospitals have been destroyed, and nearly all schools have been destroyed or damaged.

The conflict has killed 71,000 Palestinians. More than 171,000 have been wounded, and many people are counted as missing under the rubble.

According to a report by UN Trade and Development (UNCTAD), “It will still take several decades for Gaza to return to pre-October 2023 welfare levels.”

And that will only happen in a best-case scenario.

Achieving it will require an intensive growth rate backed by considerable amounts of foreign aid.

In 2023–2024, Gaza’s economy shrank by 87 percent, causing per capita gross domestic product (GDP) to drop to $161, one of the lowest rates in the world.

Strengthening institutions

According to the most recent estimate of the extent of the damage, calculated by the World Bank, the UN and the EU in May 2026, a total of around $71.4 billion is needed for recovery and reconstruction in the Gaza Strip.

The United States, along with a number of Arab and European countries, are willing to contribute to rebuilding the war-torn area.

Jaco Cilliers, the special representative of the United Nations Development Programme (UNDP), said that “we’ve had very good indications already” about this.

The World Bank report states that in addition to financing, development partners can provide assistance in strengthening public institutions and rebuilding infrastructure, especially energy and water infrastructure.

The report also highlights the healthcare and education systems. Over time, private investment could be attracted for high-priority sectors.

“Ultimately, recovery in the Palestinian territories will depend not only on financial resources but also on restoring predictability to the economic system, strengthening institutions, and expanding opportunities for a generation that has grown up in the shadow of intermittent conflict,” the World Bank report reads.

A focus on security

Another challenge is that the prolonged war is stoking radical sentiment and reducing the chances for compromise and a peaceful resolution in the foreseeable future.

“The risk is that the deteriorating status quo becomes permanent: a divided Gaza, Hamas holding military and administrative control over two million people across less than half the territory,” said Nickolay Mladenov, high representative for Gaza for the Board of Peace.

The result will be that another generation of Gazans will grow up in tents, and this will hinder progress toward the creation of a Palestinian state.

Gazans will not be the only ones to suffer—Israel will also lack security.

Mladenov said this future possibility is one that “Israelis, Palestinians and the region should all fear,” and he urged the parties to come together.

The war in Gaza is also affecting the Middle East’s entire security system.

According to a report by the Institute for the Study of Diplomacy, Egypt and Jordan are most at risk in the event of a mass population displacement from Gaza.

Processes set in motion could cause a resurgence of radical domestic opposition in these countries. Despite the continuation of the conflict and the crisis in Gaza, the Palestinian question has taken on a new urgency in the international arena, while Palestinian elections have returned to the diplomatic agenda.