Afghanistan’s economic future remains uncertain, with the threat of stagnation looming until at least 2025, according to a new report by the World Bank. The report, titled “Navigating Challenges: Confronting Economic Recession and Deflation,” highlights a 26 percent contraction in real GDP growth and a decline in external financing avenues for off-budget expenditures, painting a bleak picture of the country’s economic outlook.
Structural deficiencies in the private sector and 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.
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