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Gaza Rapid Damage and Needs Assessment: June 2021

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Executive Summary

On May 20, 2021, after 11 days of the worst conflict since 2014, Israel and militants in Gaza agreed to a cessation of hostilities. Casualties were recorded on both sides, including more than 260 dead in Gaza according to the Palestinian Authority (PA) and the Office of the UN High Commissioner for Human Rights (OHCHR), along with considerable destruction of residential and commercial buildings. While in Israel, 9 Israelis and 3 foreign workers were killed according to the Israeli Ministry of Foreign Affairs. In Gaza, the conflict damaged various core physical and digital infrastructure assets, particularly buildings, hospitals and health centers, water and sanitation facilities, and transport, energy and communications networks. Exacerbated by previous trauma, this renewed round of violence having a particularly serious impact on children’s mental health as they are more susceptible to the effects of high levels of stress.

Beyond the human tragedy and the subsequent immediate humanitarian relief that was channeled to Gaza, the economic impact of these 11 days of conflict has severely weakened an economy already reduced to a fraction of its potential. Gaza is one of the most densely populated areas in the world, with around 2.1 million individuals living in a total area of 365 square kilometers. For nearly 15 years, the movement of people and goods into and out of Gaza has been under restrictions imposed by the Government of Israel (GoI) due to security concerns. This isolation, in addition to multiple episodes of conflict and a damaging internal political divide, has created a severe humanitarian situation in Gaza that was exacerbated by the recent hostilities.

The Gaza 2021 Rapid Damage and Needs Assessment (RDNA) was jointly launched by the World Bank Group (WBG), the European Union (EU) and the United Nations (UN) to estimate the total damage and losses incurred in Gaza following the latest conflict. Additionally, it seeks to estimate the immediate and short-term needs, respectively covering the period of 0-6 months and 6-24 months, in order to recover and rebuild the affected sectors. Accordingly, the ultimate goal of this RDNA is to inform the PA, the WBG and its partners, donors, and other stakeholders of the most urgent recovery and reconstruction needs. The RDNA will be presented and discussed at the technical Ad Hoc Liaison Committee (AHLC) meeting scheduled for July 6, 2021 and thereafter at the ministerial level meeting in early autumn.

Based on the findings of this RDNA, the damages are estimated at between US$ 290 – 380 million. The Social Sectors, defined in this report as Housing, Health, Education, and Social Protection and Jobs, have borne the brunt of damage estimated at between US$ 140 –180 million. The Housing Sector alone represents almost 93 percent of the total damages to the Social Sectors. Additionally, the Infrastructure Sectors, covering Municipal Services, Transport, Water and Sanitation, Energy and Digital Infrastructure, have incurred between US$ 60 – 85 million in damages. The Productive Sectors, encompassing Agriculture, Industry, Trade and Services, and the Financial Sector, are estimated to have sustained between US$ 75 – 90 million in damages. Finally, Cross Cutting Sectors such as Governance and Environment have incurred damages in the range of US$ 15 – 25 million. Economic losses amount to between US$ 105 – 190 million.

Once again, the Social Sectors have incurred the biggest share of losses, ranging between US$ 60 – 80 million. Around 87 percent of these losses are due to losses incurred, or to be incurred, from additional health and social protection costs and unemployment, with the conflict significantly impacting the fragile sources of livelihoods and safety nets of the most vulnerable. The Infrastructure Sector has incurred losses of between US$ 10 – 35 million, while the Productive Sectors have sustained losses of between US$ 35 – 70 million. Finally, both the Governance and the Environment Sectors have lost approximately US$ 2– 5 million.

The immediate and short-term recovery and reconstruction needs (during the first 24 months) are estimated between US$ 345 – 485 million. This assessment includes a focus on Building Back Better (BBB), an approach that ensures that recovery and reconstruction efforts factor in resilience and sustainability, moving beyond simply rebuilding the assets and networks destroyed or damaged to pre-conflict levels. In this regard, the total needs have factored in the cost of physical reconstruction along with proposed interventions to reduce Gaza’s vulnerabilities and incorporates actions that promote greater inclusion, stronger climate and environmental resiliency, enhanced transparency and accountability, and ensures the sustainability of the recovery process.

In the immediate term (0-6 months), from now until the end of 2021, the recovery needs are estimated at between US$ 125 – 195 million; thereafter, the short-term recovery and reconstruction needs (6- 24 months) amount to between US$ 220 – 290 million. Once again, the Social Sectors bear the largest share, representing some 36 percent of immediate needs and 52 percent of short-term needs. The immediate needs for the Infrastructure Sectors range between US$ 35 – 60 million-, and short-term needs at between US$ 50 – 75 million. The needs of the Productive and Financial Sectors are estimated at between US$ 70 – 95 million, while the Cross-Cutting Sectors are estimated between US$ 30 – 45 million for recovery and reconstruction.

Due to the impact of the conflict on capital stock and the cessation of economic activity during the 11-days conflict, Gaza’s Gross Domestic Product (GDP) is projected to contract by 0.3 percent in 2021, compared to an estimated growth rate of 2.5 percent prior to the most recent conflict. If the security situation remains stable, the economy may rebound, from a low base. However, the impact of the reduction in the capital stock is expected to be carried over for at least the next two years, hampering future growth unless reconstruction efforts are expedited. The losses in GDP have translated into worsening social conditions. Moreover, unemployment in Gaza, already high prior to the conflict, is estimated to increase to 50 percent in 2021 mainly due to the damage to businesses, physical injuries and because of the overall decline in economic activity. This rate would be the highest since the early 1990s when the Oslo Accords were signed.