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By Emma Farge and Cecile Mantovani
GENEVA (Reuters) -Gaza's economy has shrunk to less than a sixth of its size when the Israel-Hamas war began nearly a year ago, while unemployment in the occupied West Bank has nearly tripled, a U.N. report said on Thursday, underscoring the challenges of reconstruction.
The report by the United Nations Conference on Trade and Development (UNCTAD) described Gaza's economy as "in ruins" more than 11 months after Israel launched a military campaign there that has reduced much of the Strip to rubble in response to the deadly Oct. 7 attacks on southern Israel by Hamas militants.
The U.N. trade body said the Palestinian Authority (PA), which exercises limited self-rule under Israeli occupation in the West Bank, is under "immense pressure" that is jeopardising its ability to function.
"The Palestinian economy is in freefall," UNCTAD Deputy Secretary General Pedro Manuel Moreno told reporters in Geneva.
"The report calls for the international community to halt this economic freefall, address the humanitarian crisis, and lay the groundwork for lasting peace and development," he said, calling for a comprehensive recovery plan.
Declining international aid and revenue deductions and withholdings by Israel - which UNCTAD estimated at more than $1.4 billion since 2019 - are adding to the strain on the Palestinians, the report said.
Israel's Finance Minister Bezalel Smotrich, who ordered the funds to be withheld, accuses the PA of supporting the Oct. 7 attack on Israel. The PA denies promoting violence. Israel also routinely deducts so-called "martyr payments" paid by the PA to families of militants and civilians killed by Israeli forces.
The document described "a rapid and alarming economic decline" in the occupied West Bank, which has suffered a surge in violence since the Gaza war.
JOB LOSSES
A total of more than 300,000 jobs have been lost in the West Bank since the war began, UNCTAD said, driving up the unemployment rate there from 12.9% to 32%.
UNCTAD blamed the decline on the unrest, which the U.N. says has resulted in the deaths of more than 650 Palestinians since Oct. 7 as well as new Israeli trade restrictions such as checkpoints.
Israel, which does not give Palestinian death tolls, says around 40 Israelis have been killed in attacks by Palestinians outside Gaza since Oct. 7. It says its actions in the West Bank have been necessary to counter Iranian-backed militant groups and prevent harm to Israeli civilians.
The war was triggered when Hamas attacked Israel on Oct. 7, killing 1,200 people and taking about 250 hostages, according to Israeli tallies. Israel's subsequent assault on Gaza has killed more than 41,000 Palestinians, according to the enclave's health ministry.
(Reporting by Emma FargeEditing by Gareth Jones)