The war has come at a time when the three Arab countries face a struggle with fiscal pressures, slow growth and steep unemployment and has deterred much-needed investment and hit consumption and trade. Lebanon is in deep economic crisis.

The study, commissioned by the UN Development Programme, said the cost of the war for the three states in terms of loss of GDP may amount to US$10.3 billion or 2.3 %, and could double if it lasts another six months.

“This is a massive impact,” Abdallah Al Dardari, UN assistant secretary-general and UNDP’s director of the Regional Bureau for Arab States (RBAS) who lead the study told Reuters.

“The crisis was a bomb in an already fragile regional situation. It soured sentiment with fear of what could happen and where things are going,” he added.

Israel launched its campaign to annihilate the Hamas group that controls Gaza after fighters stormed across the border fence on Oct 7, killing 1,200 Israelis, mostly civilians, and seizing 240 hostages.

Since then, Israeli forces have besieged the enclave and laid much of it to waste, with more than 18,000 people confirmed killed according to Palestinian health authorities, and many thousands more feared lost in the rubble or beyond the reach of ambulances.

Dardari said the scale of destruction in Gaza within such a brief time was unprecedented since World War Two.

“To lose 45-50 % of all housing in one month of fighting… We have never seen anything like this… the relationship between destruction level and time, it’s unique,” Al Dardari added.

Dardari, an economist and expert on reconstruction in conflict zones, said his team of experts were already reaching out to development funds and multilateral financial institutions on post-war reconstruction scenarios for Gaza.