Why are major commercial centres opening up amid Gaza's rubble?

Amid the rubble of destroyed buildings in Gaza City, and near streets still bearing the marks of Israeli airstrikes, a shopping complex recently opened. Its glass facades and colourful lights create a scene that appears contradictory at first glance. Electric decorations hang from the high ceiling, and music plays through the corridors, while surrounding buildings remain damaged or largely uninhabited.

The new complex, inaugurated at high cost despite scarce resources and high prices for construction materials and transport, does not reflect the full economic reality of Gaza or the lingering presence of death in the area.

While poverty rates rise and purchasing power declines for most residents, the project presents a striking commercial landmark, asserting itself amid a fragile economy.

In the surrounding area, the contrast is stark. Tents shelter displaced families. Shops remain closed. Roads are damaged, and services are frequently interrupted. Yet visitors stream into the complex, browsing stores and taking photos, as if seeking a moment of normalcy amid exceptional circumstances.

This illustrates what can be called a "shock economy", where patterns of spending and commercial activity emerge in the heart of crises.

In the Sheikh Radwan area north of Gaza City, merchant Nael Hamdan opened a sweet shop after months of halted commercial activity. Hamdan told Al-Araby Al-Jadeed, the Arabic-language sister publication of The New Arab, that the cost of renovating and decorating the store exceeded $7,000, a substantial sum under current conditions, reducing the expected profit margin.

"Although the amount is large and affects profits, it was important for the shop to look neat and attractive," Hamdan said. "People need decorated spaces that make them feel life is gradually returning and that Gaza is not dead. Therefore, investment in appearance and fittings is not a luxury but a psychological and marketing necessity."

Hamdan acknowledged that prices rise for consumers due to these high costs, whether in construction materials or production supplies. He emphasised that opening new projects sends a positive message: life's return must be highlighted, even if gradual and costly; commercial activity shows that people are still capable of resilience.

New malls 

Yasmin Dahlan, a Palestinian who returned from forced displacement from southern Gaza to the north, lives in a temporary tent after her home was destroyed. She said the opening of what locals call malls and new restaurants in northern Gaza gives her some optimism despite harsh realities. 

"When I see a shop opening its doors or a new restaurant welcoming customers, I feel life has not completely stopped," she told Al-Araby Al-Jadeed. "When the Israeli army was evacuating northern Gaza, we felt the area was finished, but these scenes tell us some insist on staying."

Dahlan sees these projects as potentially reinforcing residents' resilience in their areas and as a message that reconstruction is possible, even in small steps.

"We may not have homes now, but commercial activity gives us hope that the wheel of life will turn again," Dahlan remarked.

Understanding the contradiction

The term "shock economy" describes economic transformations that arise after major crises, such as wars, natural disasters, or financial collapses. Markets do not always follow traditional supply-and-demand rules but are influenced by psychological, social, and security factors.

In some cases, a shock leads to a sharp contraction and a near-complete halt of activity. In others, new economic patterns emerge, such as the growth of certain sectors or exceptional profits for those able to exploit opportunities in a high-risk environment.

Shock economy is also linked to "redistribution of wealth during crisis", where the savings of many erode while profits accumulate among those with liquidity or access to scarce goods.

Remittances and humanitarian aid further drive consumption even amid collapsing local production. In Gaza, the shock economy intersects with factors such as blockade, dependency, and a weak production base, making the scene more complex. Visible commercial activity does not indicate full economic recovery but may reflect temporary dynamics driven by psychological needs to consume and demonstrate the ability to endure despite destruction.

Amid more than two years of destructive Israeli operations, Gaza's GDP contracted sharply by 83% in 2024, followed by an additional 7.8% decline in 2025. This reflects the near-total collapse of productive capacity and an actual halt to economic growth.

A previous report by the United Nations Conference on Trade and Development (UNCTAD) stated Gaza's economy had entered a phase of "complete destruction". Losses extended beyond physical damage to undermine the foundations of economic life, marking one of the deepest crises globally in decades.

The report noted that per capita GDP fell to 2003 levels, representing a loss of 22 years of economic development, with per capita output dropping to just $161 annually, among the lowest globally.

Unusual investments

Economic specialist Mohammed Barbakh classifies Gaza's economy as part of "peculiar economies", a term not common in economic literature, used to describe the Palestinian context generally. He said Gaza's economy exhibits unusual contradictions and behaviours that appear illogical by classical economic rules.

"The economy in Gaza previously suffered from blockade and dependency and now faces war and wide-scale collapse of infrastructure and services," Barbakh told Al-Araby Al-Jadeed. "Theoretically, destruction should halt activity, income decline should reduce consumption, and profit opportunities should decrease in crises, but what we see shows different patterns."

"Despite sharp price increases, buying and selling continue. New projects, malls, and some signs of affluence still emerge despite high poverty," he added.

Barbakh noted that while most of society suffers, a segment has achieved profits exceeding those expected under normal commercial logic due to supply-demand imbalances and the scarcity of some goods and services.

He explained part of this phenomenon as "shock consumption" or psychological release after crises. “Individuals who endured severe experiences sometimes spend time compensating for deprivation or regain a sense of control over life. While this may contradict classical economic logic, it is understandable in prolonged crises.”

Mid-month, Gaza's Chamber of Commerce, Industry, and Agriculture opened a local food industry exhibition titled "Our Production is Life", aiming to revive local production after the destructive war. Small businesses and family-run enterprises showcased what they preserved and developed despite economic hardships and the ongoing war's effects.

Tala Nashwan from the chamber's public relations said the exhibition's main goal is to highlight national products and recovery efforts despite difficult conditions, emphasising that "two years of destruction have not diminished these projects' drive to continue."

Article translated from Arabic by Afrah Almatwari. To read the original, click here.