Afghanistan Facing Strong Headwinds to Growth, World Bank says

Kabul, July 21, 2019 – Afghanistan’s economy grew by around two percent in 2018 despite progress in economic policies, likely leading to further increases in poverty and deterioration in living standards, according to the World Bank’s recent Afghanistan Development Update.

Released today, the latest edition of the biannual publication highlights the negative combined impacts of conflict, drought and political uncertainty on the Afghan economy, resulting in the lowest growth rates among South Asian economies in 2018.

“Afghanistan faces challenges of insecurity, election-related political uncertainty, potential declines in international security support, in addition to the drought in 2018” said World Bank Afghanistan Country Director Henry Kerali. “Any one of these shocks would normally generate strong headwinds to growth. Afghanistan has faced all of these concurrently”.

The Development Update publication notes that economic management remains strong in Afghanistan and prospects are improving for 2019, with growth expected to accelerate to 2.5 percent with the easing of drought conditions. Government policies have continued to support low inflation, improved revenue collection, and a limited fiscal deficit.

According to the report, slow growth generally reflects the impact of negative shocks rather than deterioration in government policy. In fact, government has, by many measures, maintained progress with policy reform even during these difficult times. Government revenues reached a new high of nearly 190 billion afghanis in 2018, up seven percent from 2017, the Update notes, while budget execution rates also reached record levels. The government spent 92 percent of the available national budget in 2018 and is on track to repeat this strong performance in 2019. - Read More

Afghanistan Facing Strong Headwinds to Growth, World Bank says