According to the report, Gaza's economy contracted by 6 percent in the first quarter of 2018. It said unemployment is now over 50 percent — and over 70 percent among Gaza's youth.

Already squeezed by the more than decade-long Israeli blockade, Gaza's economy has been further weakened by US aid cuts of more than $500 million to the Palestinians, including ending all support for the UN agency for Palestinian refugees.

"A combination of war, isolation, and internal rivalries has left Gaza in a crippling economic state and exacerbated the human distress," said Marina Wes, the World Bank's director for the region.

The report was released ahead of a high level meeting of the bank's Ad Hoc Liaison Committee, responsible for coordinating development assistance to the Palestinians, on Sept. 27.

Wes said the increasingly dire economic situation in Gaza "has reached a critical point."

"Increased frustration is feeding into the increased tensions which have already started spilling over into unrest and set back the human development of the region's large youth population," she added.