Afghanistan’s Economic Uncertainty: Navigating Challenges and Pursuing Resilience”.
Afghanistan’s economic future remains uncertain, with a 26% contraction in real GDP growth and decreasing external financing avenues for off-budget expenditures. The World Bank’s latest Afghanistan Development Update, titled “Navigating Challenges: Confronting Economic Recession and Deflation,” paints a bleak picture of the country’s economic prospects. Structural deficiencies in the private sector, coupled with decreasing international support for essential services, are expected to hinder any significant economic progress. This economic standstill is likely to worsen poverty and unemployment, with half of the population already living in poverty and 15 million people facing food insecurity.
The World Bank Country Director for Afghanistan, Melinda Good, emphasizes the importance of transitioning from consumption-driven growth and international aid reliance to a more resilient, private sector-led economy. This shift should focus on addressing harmful gender policies, investing in health and education, and capitalizing on Afghanistan’s strengths in agriculture and extractive sectors. Agriculture has the potential to drive growth, reduce poverty, create jobs, and improve income distribution. To unlock this potential, strategic investments are required in irrigation infrastructure, land tenure security, and market access to enhance agricultural productivity and resilience.
The Afghanistan Development Update is part of the World Bank’s Afghanistan Futures program, which produces research, monitoring, and analytical reports on the country’s economy and society. Through this program, the World Bank aims to support evidence-based policymaking and provide insights to the international community on economic developments in Afghanistan. For more information on this topic or any other questions regarding this article please contact Diana Chung at dchung1@worldbank.org
