Life there was never easy. But in four years of Intifada or uprising against Israel, Gaza's economy has shrunk by nearly a third with unemployment now at almost 60 percent. UN relief agencies say most locals live on less than $2 a day.
Meanwhile, Gaza's 1.3 million inhabitants have been caught all too often in the crossfire of Israel's powerful army and Palestinian militant groups. Paul McCann, chief spokesman in Gaza for the United Nations Relief and Works Agency for Palestine Refugees (UNWRA), spoke with RFE/RL from Jerusalem.
"In the last year it is not just economic anymore. There are almost daily missile strikes, conflict, shooting incidents near settlements, bulldozers and tanks coming out into the Strip and firing into crowded refugee camps. So it is definite that conflict suffering has increased over the last 12 months or so," McCann said.
Civilian suffering has probably peaked in the last two weeks. The Israeli Army launched a large-scale military operation in northern Gaza after militants fired homemade Qassam rockets into a southern Israeli town, killing two small children.
Israel says its aim is to clear a buffer zone along the Gaza-Israeli border to prevent the short-range Qassams from reaching Israel. Israeli Defense Minister Shaul Mofaz says that militarily, the raid appears to have achieved this aim.
"I believe that the operation is so far successful. It will take time until we are sure that we have removed the threat of the Qassam rockets [to] Israel," Mofaz said.
But the chief burden of the operation, predictably, has fallen on civilians. A spokesman for the Palestinian Mission in London, Husam Zomlot, describes the raid as the harshest of the entire Intifada.
"More than 100 [people] were killed, thousands were injured, hundreds of homes were demolished for the sake of establishing a buffer zone deep into Gaza territory," Zomlot said.
Zomlot also says the ongoing Israeli incursion has worsened the already precarious supply situation.
"All food supplies come to the Gaza Strip via the north of Gaza, which is the border between Gaza and Israel, and for the last 12 days or so, this border has been sealed, on the one hand, and on the other hand, the movement between the villages and towns of that entire segment of Gaza is paralyzed. Nobody can move -- nobody can even leave their houses," Zomlot said.
But despite the difficulties, the Palestinians somehow still manage to get by. The UN's McCann says that's largely because they have learned to help each other.
"Palestinian society has reverted to clan and family networks. Most individuals who have any kind of income are sharing it with maybe seven to 10 other adults, and countless children. And people are really holding together. The cohesion of the Palestinian community has allowed then to survive; nobody knows how long that can go on, though," McCann said.
In response to the lack of jobs, Gaza residents with spare capital have sought to create opportunities by becoming street vendors. Typically, they buy a stock of Egyptian-made clothing, sweets, or various trinkets, and sell them from stalls or baskets.
State institutions run by the Palestinian Authority, meanwhile, provide a modicum of economic stability. Employees continue to receive salaries, mainly due to donations from the European Union and some Arab Gulf countries.
UN officials believe the international aid effort is sustainable well into the future, even if a certain "donor fatigue" is evident. At the moment, the response to appeals for aid has dwindled to between 40 and 45 percent of requested funds.
The latest Gaza fighting comes amid plans by the government of Israeli Prime Minister Ariel Sharon to make a unilateral withdrawal of troops and Jewish settlers from Gaza.
Analysts say that plan has inspired militants to increase their attacks on Israeli targets in and around Gaza to make it seem as if they are the ones driving out Israel.
Sharon says he will put the hotly contested proposal to a vote in the Knesset next week. Hard-liners have vowed to sink the plan.