The ongoing war in Gaza has triggered a domino effect on economies across the Middle East, with markets absorbing the fallout of what many view as an increasingly disproportionate and destructive military campaign.
In Gaza, the humanitarian and economic toll is devastating. With over 85% of the population displaced and infrastructure destroyed, the economy shrank by 86% in Q1 2024. Over 507,000 jobs have been lost across the Palestinian territories, with the unemployment rate soaring to 57%. As basic commerce collapses, Gaza’s future looks increasingly bleak.
Meanwhile, Israel’s war effort, initially justified as a defensive response, has evolved into a prolonged and expansive assault that has not only decimated civilian areas but also contributed to deep economic uncertainty at home. The Israeli economy now bears the weight of war-related costs exceeding $270 million per day, downgraded credit ratings by Moody’s and Fitch, and shrinking public trust in financial markets. Tourism has cratered, consumer confidence has dipped, and labor shortages are affecting core sectors.
In Egypt, Suez Canal revenues fell by nearly two-thirds, a direct result of Houthi-linked Red Sea shipping disruptions, which escalated after the Gaza war. This has put added pressure on an already strained Egyptian economy.
Despite international calls for restraint, Israel’s military decisions have compounded economic risks regionally, threatening not just peace but financial stability across the MENA region. As the war drags on, the true cost is being paid not just in lives, but in livelihoods.
