Harvest 2024.. Arab economies pay the price of geopolitical tensions | economy

The Israeli war on the Gaza Strip and geopolitical tensions in the Middle East cast a shadow over the economies of many Arab countries during 2024, exacerbating economic crises in some countries and making recovery difficult in others.

The negative impacts included the countries of Palestine, Lebanon, Egypt and Jordan, while Israel itself was affected in an unprecedented way.

Palestine

As the Israeli war on the Gaza Strip continued, the Palestinian economy suffered massive losses that led to an unprecedented economic crisis.

• GDP contractionWorld Bank estimates, issued on December 16, showed that the West Bank’s economy shrank by 23% during the first half of the year, while Gaza witnessed an 86% decline.
• Destruction of the economic structure: Israeli forces destroyed 88% of private sector facilities in Gaza, with 66% completely destroyed and 22% partially damaged.
  

• High unemploymentUnemployment rates in Gaza reached more than 80%, with all sectors affected, especially construction, manufacturing, and trade.
• Financial challengesThe decline in Israeli revenues and deductions has reduced the salaries of Palestinian Authority employees to 60-70% since the beginning of the war, with the Authority’s financing needs reaching $1.04 billion during the first ten months of the year.

Lebanon

The Lebanese economy was greatly affected as a result of the Israeli war on southern Lebanon.

• Economic losses: The losses of the Lebanese economy were estimated at approximately $5.1 billion as of mid-November.
• Real estate sector: Real estate losses amounted to $3.4 billion, with about 100 housing units completely or partially destroyed.
• Job loss: About 166 thousand people lost their jobs, which contributed to an increase in unemployment.
• Economic growth: The war reduced the GDP growth rate by 6.6%, which further complicated the Lebanese economic crisis that has been ongoing since 2019.

Egypt

Egypt was among the countries economically affected by the war, especially with the Suez Canal, one of the most important sources of national income, affected.

• Channel revenues declinePresident Abdel Fattah El-Sisi reported that the Israeli war on Gaza cost the Suez Canal losses amounting to $7 billion, a 60% decrease compared to 2023.
  

• Slowing economic growth: GDP growth fell to 2.4% for the 2023/2024 fiscal year, compared to 3.8% in the previous year.
• Inflation: The International Monetary Fund expects the inflation rate to rise to 33.3% for the fiscal year 2024/2025, compared to 24.4% in the previous year.

Jordan

Jordan has witnessed noticeable impacts on its economic sectors, especially tourism.

• Tourism decline: Tourism income decreased by 4.4% during the first ten months of 2024, with tourist numbers declining by 6.6%.
• Sales decline: Retail sectors such as clothing, electronics and furniture recorded a decline in sales, while pharmacy sales fell by 20% as consumers turned towards basic purchases.

Israel

Despite being the attacking party, the Israeli economy suffered significant losses as a result of the war.

• Financial deficitIsrael recorded a deficit of 7.7% of GDP, equivalent to $40.5 billion, the highest deficit since the beginning of the millennium.

• Tourism declineThe number of arriving tourists decreased by 70% to reach only 885 thousand tourists, compared to 2.96 million tourists in the previous year.
• Loss of Palestinian laborThe absence of 170,000 Palestinian workers, who were working in vital sectors such as construction, led to the disruption of economic activities, but no official estimates of the resulting losses were issued.

These numbers confirm that geopolitical tensions in the Middle East during 2024 were not limited to human losses, but rather caused widespread economic crises. Despite the attempts of the affected countries to address the repercussions, the economic prospects of the region will remain dependent on the extent to which the political and security conditions stabilize in the coming year.