Economy Type
Conflict-Affected, Aid-Dependent & Reconstruction Economy
Conflict-affected aid-dependent reconstruction economy
Palestine is an economic zone consisting of the West Bank and the Gaza Strip, where political, administrative, and economic activities are directly affected by long-term conflict and restrictions on movement and trade.
Since 2023, the infrastructure for production, housing, transportation, health, and education in the Gaza Strip has been extensively destroyed, and the West Bank has also experienced restrictions on labor mobility, disruptions in fiscal revenue, and a decline in private consumption. According to UNCTAD, the Palestinian economy's GDP in 2024 fell to about 70% of the 2022 level, and GDP per capita retreated to 2003 levels.
The World Bank projects that the Palestinian economy could grow by about 4.5% in 2026, but this depends heavily on conditions such as the continuation of the ceasefire in the Gaza Strip and stability in the West Bank.
Country Definition
Palestine is a conflict-affected economy where international aid, the maintenance of public services, and long-term reconstruction projects form the core of the economy, with independent production and trade bases severely restricted.
Why It Matters
While it is difficult to assess Palestine as a typical emerging consumer market, large-scale demand could arise in the sectors of housing, hospitals, schools, electricity, water and sewage, waste management, telecommunications, and logistics once reconstruction begins in earnest.
The World Bank has supported the sectors of water, energy, urban development, education, health, social protection, waste, digital, and finance through its Palestine support projects, and in 2025, it established the Palestine Reconstruction and Development Fund to support reconstruction and economic recovery.
Korea Perspective
For South Korea , humanitarian aid, international procurement, and public infrastructure recovery and reconstruction projects are more realistic areas of cooperation than short-term commercial exports .
The major potential fields are as follows.
- modular housing
- Hospitals and medical equipment
- Water purification and sanitation facilities
- Solar Power & ESS
- Mobile power generation equipment
- schoolmaster
- Communications and Digital Administration
- Waste treatment
- Food and refrigerated logistics
- Reconstruction project management
When participating in a project, priority should be given to reviewing financing through international organizations and multilateral development banks, the end users of the goods, customs clearance and transportation feasibility, and compliance with sanctions and export controls.
Key Keywords
- Reconstruction
- Humanitarian Supply
- West Bank
- Gaza
- Development Finance
- Trade Dependency
- Public Infrastructure
- Digital Services
- Water and Energy
- Conflict Risk
Palestine holds non-member observer status at the United Nations and is recognized by the majority of the international community. However, issues regarding territory, borders, the status of Jerusalem, refugees, and national sovereignty remain unresolved.
Administratively, the Palestinian Authority governs parts of the West Bank, while normal administrative and economic activities in the Gaza Strip are restricted due to a separate political and security structure and war damage.
The Palestinian economy is highly linked to Israel in terms of customs, clearance, labor markets, and monetary systems. It does not have its own currency, and the Israeli New Shekel, US dollar, and Jordanian dinar are used.
By the end of 2025, the Palestinian Authority's borrowing from domestic banks had increased to approximately $3.3 billion, and the liquidity burden on public finances and the financial system was growing.
Key Features
- Unresolved issues regarding national sovereignty and borders
- Economic segmentation of the West Bank and Gaza Strip
- No internal call
- dependence on Israel's economic and customs systems
- Dependence on international aid and development finance
- High unemployment and poverty
- Extensive damage to infrastructure and housing
- Reconstruction and the maintenance of public services are key challenges.
The Palestinian economy has been structured around the service sector, construction, small-scale manufacturing, agriculture, commerce, and the public sector.
However, due to war and movement restrictions, economic activity in the Gaza Strip has virtually collapsed, and the West Bank has also stagnated due to restrictions on workers' employment in Israel, rising trade costs, and reduced public spending.
The World Bank projects the Palestinian population in 2025 to be approximately 5.4 million and the GDP per capita to be approximately $3,171.
UNCTAD analyzed that Palestine's total GDP in 2024 decreased by about 27% compared to the previous year, and Gaza's GDP shrank to about 13% of the level in 2022.
The possibility of economic recovery depends on the following conditions.
- armistice and security stability
- Border and checkpoint accessibility
- Recovery of labor mobility
- Inflow of aid funds
- Commencement of reconstruction project
- Palestinian Authority Financial Stability
- Maintaining the private financial system
Market characteristics
- Extreme regional economic disparities
- Demand centered on public and aid projects
- High unemployment and poverty
- dependence on imports
- Contraction of private investment
- Financial and cash liquidity burden
- Movement and customs clearance restrictions
- Prolonged demand for reconstruction
MarketHub Point
Palestine should be evaluated based on humanitarian needs, international procurement, the maintenance of public services, and the actual execution of future reconstruction funds, rather than the current size of the consumer market.
Palestine's industrial base is centered on services, small-scale manufacturing, agriculture, stone and building materials, food, information and communications, and tourism.
3.1 Construction and Reconstruction
The largest mid-to-long-term demand is likely to arise from the restoration of housing and public infrastructure.
The major fields are as follows.
- Emergency housing and modular housing
- Cement, steel, and construction materials
- Hospitals and schools
- Roads and bridges
- Water supply and sewage system
- power grid
- communications network
- Construction waste treatment
- mine and hazardous material removal
- Reconstruction monitoring
Reconstruction can only begin in earnest once political consensus, security, border crossings, financial management, and a transparent procurement system are in place.
3.2 Water and Energy
Palestine has a high dependence on external sources for water and electricity, and supply stability has been weakened by the destruction of facilities and fuel shortages.
The major opportunities are as follows.
- Mobile water purification plant
- Seawater desalination
- sewage treatment
- solar power
- ESS
- Mobile generator
- Hospital independent power source
- smart meter
- Leakage management
- Energy Management System
Korean companies can prioritize considering mobile, distributed, and rapid-installation facilities in the initial stages rather than large, centralized facilities.
3.3 Agriculture and Food
Olive, vegetable, fruit, livestock, and some grain production takes place in the West Bank, and the Gaza Strip also historically possessed horticulture, fisheries, and food sectors.
Currently, food production and supply chains have significantly contracted due to damage to farmland, irrigation, storage, and distribution.
Promising fields are as follows.
- Seeds and fertilizers
- small agricultural machinery
- Irrigation and water conservation
- greenhouse
- food processing
- Refrigeration/Freezing
- grain storage
- Food safety inspection
- fisheries and livestock recovery
- agricultural data
3.4 Manufacturing
Palestine's manufacturing industry is centered on food, pharmaceuticals, stone, furniture, textiles, plastics, and light industry.
The major opportunities are as follows.
- food processing
- Medicines and medical consumables
- packaging materials
- construction materials
- furniture
- Recycling
- Small-scale production facilities
- Quality inspection
- Solar power for factories
- Industrial digitalization
Local manufacturing must simultaneously manage the import of raw materials and equipment, power, movement restrictions, and market access issues.
3.5 Digital and Professional Services
In environments where physical movement is restricted, software, remote work, e-commerce, fintech, and digital public services have relative potential for expansion.
The major fields are as follows.
- e-government
- public finance system
- remote education
- telemedicine
- digital identity
- mobile payment
- cybersecurity
- cloud services
- Reconstruction Data Management
- Geographic Information System
MarketHub Point
Industrial opportunities in Palestine are more likely to arise during the process of restoring social infrastructure, such as water, electricity, housing, healthcare, and digital administration, rather than through the expansion of existing production facilities.
Palestine has a chronic trade deficit and a structure highly dependent on imports.
According to the Palestinian Central Bureau of Statistics, exports of goods and services in 2024 amounted to approximately $2.677 billion, while imports amounted to approximately $9.069 billion, with imports exceeding three times the export value.
As of October 2025, approximately 87% of merchandise exports and 62% of merchandise imports occurred through trade with Israel. This demonstrates that Palestinian trade is highly concentrated in specific markets and customs routes.
In April 2026, the monthly trade deficit in goods was recorded at approximately $485.3 million.
Major exports
- Stone and Marble
- olive oil
- agricultural products
- food
- medicines
- furniture
- Textile and light industrial products
Major Imports
- food
- fuel
- electrical energy
- Machinery and Vehicles
- medicines
- Chemical products
- construction materials
- consumer goods
Supply chain characteristics
- Israel's dependence on trade and customs
- Direct access to the port restricted
- Checkpoint and border crossing delays
- High transportation and insurance costs
- import-dependent consumption structure
- Severe constraints on logistics in the Gaza Strip
- Proportion of international organization procurement
- Country of origin and end-user verification required
- Risk of approval for importing reconstruction materials
- Financial and payment liquidity burden
MarketHub Point
In the Palestinian supply chain, priority must be given to verifying the feasibility of importing goods, customs clearance routes, end users, international procurement conditions, and on-site delivery capabilities, rather than price.
Business opportunities in Palestine are concentrated in humanitarian aid, maintenance of public services, preparation for reconstruction, international organization procurement, and development finance projects rather than in the general private consumer market.
The World Bank estimated the need for recovery and reconstruction in the Gaza Strip and the West Bank at approximately $53 billion. However, the actual commencement of projects depends on the continuation of the ceasefire, securing of safety, customs clearance and the entry of supplies, and the determination of administrative entities and reconstruction funds.
5.1 Emergency Housing and Urban Reconstruction
With extensive damage to housing, schools, hospitals, roads, and public facilities, demand is expected to extend from emergency housing to long-term urban reconstruction.
The major opportunities are as follows.
- Modular and prefabricated houses
- Temporary schools and health facilities
- Cement, steel, and construction materials
- Road and bridge restoration
- Urban planning and surveying
- construction equipment
- Structural safety assessment
- Construction waste treatment
- Geographic Information System
- Project Management and Supervision
In the initial stages, standardized facilities that allow for rapid installation and maintenance are important, while in the long term, land, urban planning, ownership rights, and public services must be restored together.
5.2 Water, Sanitation, and Waste
The restoration of water supply, sewage treatment, wells, sanitation facilities, and waste disposal systems is a foundational project that must take precedence over health and housing reconstruction.
The major opportunities are as follows.
- Mobile water purification facility
- Small-scale desalination
- Sewage and wastewater treatment
- Water supply tanks and piping
- Leak detection
- solar pump
- portable toilet
- Medical and household waste treatment
- Water quality test
- remote operation system
The World Bank's support projects for Palestine include water, energy, urban development, health, and waste management as major targets.
5.3 Electric Power, Solar Power, and ESS
Palestine relies heavily on external electricity and fuel, and the operation of hospitals, water purification, telecommunications, and refrigeration facilities is unstable due to facility damage and supply restrictions.
The potential sectors for Korean companies are as follows.
- solar modules
- Small-scale ESS
- Hospital independent power source
- Mobile power generation equipment
- Mini Grid
- Inverter/Transformer
- smart meter
- Energy Management System
- solar streetlights
- Emergency power restoration equipment
It is more realistic to build power gradually, starting with distributed and independent sources rather than large-scale power plants.
5.4 Health and Medical Supply Chain
Restoring medical facilities and securing medicines, supplies, and refrigeration systems are key to both humanitarian aid and long-term reconstruction.
The major opportunities are as follows.
- Mobile hospital
- Diagnostic and testing equipment
- Emergency and surgical equipment
- medical consumables
- Medicine storage
- Vaccine refrigeration
- Oxygen generator
- Hospital Information System
- telemedicine
- Medical waste disposal
The product must consider on-site power, consumable, and maintenance conditions, and a training and maintenance system is required after delivery.
5.5 Food and Agricultural Recovery
Damage to farmland, irrigation, greenhouses, and food supply chains in the Gaza Strip has significantly weakened local production capacity. Agricultural and distribution activities in the West Bank have also contracted due to movement restrictions and issues with market access.
Promising fields are as follows.
- Seeds and fertilizers
- small agricultural machinery
- drip irrigation
- Greenhouse and hydroponic cultivation
- solar agricultural pump
- grain storage
- Refrigeration/Freezing
- food processing
- Food inspection
- Agricultural Information System
Reliance on aid can be reduced by restoring local production, storage, and processing capabilities alongside simple food assistance.
5.6 Digital Administration, Finance, and Education
In environments where physical movement and facility operations are restricted, digital services can serve as a complementary means of connecting administration, education, health, and finance.
The major opportunities are as follows.
- e-government
- Public financial management
- digital identity
- Mobile cash support
- remote education
- telemedicine
- Public procurement system
- Reconstruction project data
- cybersecurity
- Cloud Backup
The World Bank explained in its 2026 Economic Update that approximately 332,000 digital cash transfers were provided, emphasizing the importance of social protection delivery systems.
5.7 International Procurement and Development Finance
In Palestine, projects are more frequently commissioned or funded by international organizations and aid agencies than by local private purchasing.
The World Bank has set forth the establishment of the Palestine Reconstruction and Development Fund in 2025 to coordinate recovery and reconstruction, economic recovery, and social resilience projects. However, as it has stated that it does not plan direct operational activities or fund transfers to the Gaza Strip at the current stage, the feasibility of actual project implementation must be verified on an individual basis.
Recommended entry structure
Donor-Funded Opportunity Screening
First, verify the projects and funding approved by the World Bank, the UN, and donor countries.
↓
Access & End-User Verification
Verify customs clearance routes, import approval, and the feasibility of delivery to the end user and the site.
↓
Pilot Supply & Maintenance
Verify product, operational, and maintenance suitability through small-scale emergency procurement.
↓
Reconstruction Consortium
It will be expanded into a consortium involving construction, energy, water, and healthcare companies.
Major Risks
- Suspension of war and ceasefire
- Border and checkpoint closures
- Restrictions on bringing in goods
- Dual-use item regulations
- End-user risk
- Delay in reconstruction funds
- Uncertainty regarding administrative entities
- Financial and cash liquidity
- Risk of facility re-destruction
- Rise in insurance and transportation costs
MarketHub Point
In Palestine, one must first determine whether the product can be approved, cleared through customs, delivered to the site, and maintained, rather than whether it can be sold.
The economic outlook for Palestine depends more heavily on security and political conditions than on macroeconomic variables.
The World Bank projects an economic growth rate of approximately 4.5% in 2026, but this is a conditional forecast based on the continuation of the ceasefire in the Gaza Strip and the maintenance of stability in the West Bank. Therefore, any rebound in growth should be interpreted not as a normalization to pre-destruction levels, but as a technical recovery arising from a severely weakened economic foundation.
According to UNCTAD, Palestine's GDP in 2024 has shrunk to about 70% of the 2022 level, and its GDP per capita has retreated to 2003 levels. This signifies structural losses that are difficult to recover from through short-term growth alone.
Future growth engines
Reconstruction investment
Restoring housing, schools, hospitals, roads, water, and electricity can serve as the foundation for the largest economic activities.
International development finance
It is highly likely that support from the World Bank, the UN, donor countries, and Arab financial institutions will sustain the finances and project implementation.
Normalization of public services
The recovery of education, health, social protection, and local administration is essential for the resumption of the private economy.
Recovery of agriculture and small and medium-sized manufacturing
Restoring local production bases for agriculture, food, pharmaceuticals, and construction materials can partially reduce dependence on imports.
digital economy
Software, remote services, mobile finance, and digital administration can partially compensate for physical limitations.
Labor market recovery
Easing movement restrictions and creating local jobs are key to the recovery of household income and consumption.
Major Structural Challenges
- Sustainable truce
- Border and mobility accessibility
- Reconstruction administrative system
- Public finance stability
- Bank liquidity
- dependence on trade and customs clearance
- High unemployment and poverty
- Damage to housing and infrastructure
- Contraction of private investment
- Transparency of reconstruction funds
The World Bank assesses that while the Palestinian banking sector maintains outwardly stable indicators, the Authority's increased domestic borrowing and shekel liquidity issues are weakening its financial functions.
Market Position
Humanitarian–Reconstruction Market + Eastern Mediterranean Development Platform
Eastern Mediterranean development and reconstruction market with potential to shift from humanitarian aid to public service recovery and long-term urban reconstruction
Key Opportunities
- modular housing
- Water and sanitation
- Solar Power & ESS
- Hospitals and medical equipment
- Food and refrigerated logistics
- agricultural recovery
- Waste treatment
- Digital administration
- Remote education and medical care
- Reconstruction project management
Recommended Strategy
Humanitarian Procurement First
We approach this by starting with emergency procurement from international organizations and aid agencies.
↓
Distributed Infrastructure
Prioritize decentralized facilities for water, electricity, and medical services over large central facilities.
↓
Reconstruction Consortium
Once reconstruction begins in earnest, it will expand into a consortium combining construction, energy, water, and digital.
Korea Opportunity Index
Opportunity Level: Medium
While Palestine faces very high risks in the commercial market, Korea possesses technological strengths in the fields of disaster recovery, modular construction, water purification, solar power, healthcare, and digital government.
The promising areas of cooperation for South Korea are as follows.
- modular housing
- Water purification and sewage treatment
- Solar Power & ESS
- Mobile medical facilities
- Medicine refrigeration
- Food and refrigerated logistics
- schoolmaster
- e-government
- Waste treatment
- Reconstruction project management
Korean companies should prioritize joint projects with international organizations, KOICA, development banks, and local public institutions over independent direct entry.
Risk Screening
Security and armistice
↓
Funding sources
↓
Import and Customs Clearance
↓
End user
↓
Field operations and maintenance
Final Assessment
Palestine is a specialized market where humanitarian aid and long-term reconstruction overlap, rather than a typical national market; while business opportunities are significant, they are feasible only when political, security, customs, and financing conditions are met.
Scope of investigation
This document was prepared by cross-reviewing official data focusing on Palestine's economic situation, reconstruction needs, public finance, trade, finance, water, electricity, health, agriculture, and digital sectors in 2025–2026, as well as the potential for Korea's development cooperation.
International organizations and overseas agencies
- World Bank
- UN Trade and Development
- United Nations
- International Monetary Fund
- Palestinian Central Bureau of Statistics
- UNRWA
- UNDP
- World Health Organization
- Food and Agriculture Organization
Palestinian institutions
- Palestinian Authority
- Ministry of National Economy
- Ministry of Finance
- Palestinian Monetary Authority
- Palestinian Central Bureau of Statistics
- Palestinian Energy and Natural Resources Authority
- Palestinian Water Authority
- Palestine Investment Promotion Agency
Republic of Korea institutions
- Ministry of Foreign Affairs
- Ministry of Trade, Industry and Energy
- KOICA
- Korea Export-Import Bank
- Korea Trade Insurance Corporation
- KOTRA
- Korea International Health Foundation
- Korea Environment Corporation
- Korea Water Resources Corporation
- Korea Electric Power Corporation
Key Review Materials
- World Bank, Economic Update on the West Bank and Gaza, May 2026
- World Bank, Gaza and West Bank Interim Rapid Damage and Needs Assessment
- World Bank, Palestinian Fund for Reconstruction and Development
- World Bank, Macro Poverty Outlook: Palestinian Territories 2026
- UNCTAD, Report on Assistance to the Palestinian People 2025
- UNCTAD, The Cumulative Economic Cost of Occupation, 2000–2024
- Palestinian Central Bureau of Statistics, Foreign Trade Statistics
- World Bank, Palestinian State and Business Portfolio Data
Writing Verification
This document was prepared according to the following criteria.
- Reflecting the World Bank's 2026 conditional growth outlook
- Reflecting the $53 billion reconstruction demand estimate
- Reflecting UNCTAD's analysis of sharp decline in GDP and GDP per capita
- Distinction between the economic situations of the Gaza Strip and the West Bank
- Do not overestimate reconstruction opportunities as immediately feasible projects
- Integrated analysis of water, power, health, housing, agriculture, and digital recovery
- Presenting a market entry structure centered on international procurement and development finance
- Includes customs clearance, import, end-user, and dual-use risks
- Reflecting liquidity risk in banks and public finances
- Linking South Korea's Disaster Recovery, Infrastructure, and Digital Capabilities
- Adhere to the order of Table of Contents 0–8 of the WCI-001 Golden Template.
- Apply MarketHub World Country Intelligence standard format
The Palestinian economy has seen its foundations for production, employment, and public services significantly weakened due to war and restrictions on movement and trade.
Future economic recovery is possible only if the ceasefire, security, border access, international financing, administrative systems, and the execution of reconstruction projects are simultaneously secured. While demand in the housing, water, electricity, health, agriculture, and digital sectors is very high, actual business opportunities are limited by political and security factors and procurement conditions.
It is appropriate for South Korea to approach this by focusing on international procurement, humanitarian assistance, decentralized infrastructure, and long-term reconstruction consortiums, rather than direct entry into consumer markets.
Final evaluation
While Palestine can transition into a humanitarian aid market in the short term and a large-scale reconstruction market in the medium to long term, it is a high-risk, specialized market where all projects must be pursued on the premise of a ceasefire, customs clearance, financing, and end-user verification.