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Afghanistan’s contracted economy faces uncertainty: World Bank

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The Afghan economy is expected to hover around no-growth territory this year, amid uncertainty after contracting by 25% since August 2021, while Islamic Emirate of Afghanistan’s (IEA) restrictive policies on women’s education and work will further lower the country’s growth prospects, says the World Bank in a report released Tuesday.

The report titled Uncertainty After Fleeting Stability, shows how Afghanistan’s economic downturn has affected all sectors. Services, which make up 45% of the country’s GDP, shrank by 6.5% last year, following a staggering 30% drop in 2021. The agriculture sector, which accounts for 36% of GDP, declined by 6.6% in 2022 due to unfavorable weather conditions and farmers’ lack of resources to cope.

The industrial sector also saw a contraction of 5.7% last year, as businesses—especially those owned by women—faced closures due to limited access to resources and financial challenges. Following a record high in 2022, exports have been declining this year while imports remain robust, resulting in a growing trade deficit, the World Bank said.

Dampened demand, better supply conditions, and a stronger currency caused inflation to sharply decline from its 18.3% peak last July, leading to deflation since April 2023. Although deflation may initially increase real wages, prolonged deflation could stifle business growth and increase unemployment, the bank warned.

A potential reduction in international aid due to fiscal pressures in donor countries and the restrictive policies on women and girls pose risks to Afghanistan’s recovery, as do concerns about stability of the banking sector and dysfunctional payments system, the report said.

“Afghanistan’s economy is fragile, relies heavily on external support and its private sector is weak,” said Melinda Good, World Bank Country Director for Afghanistan. “To recover, the country needs to prioritize spending on human capital, basic services and climate resilience and address harmful gender policies.”

According to the World Bank’s latest Afghanistan Welfare Monitoring Survey, also released Tuesday,one in two Afghans remain poor and recent gains in welfare have come at the cost of possibly exhausting all coping strategies and household resources.

Since the economic crash of 2021, households report an improvement in their capacity to meet basic needs, but deprivation and vulnerability remain high. Afghan households have mobilized extra labor to make ends meet, mainly among youth and women. The overall increase in labor supply has outpaced demand, doubling unemployment.

While improved security has increased primary school attendance and narrowed gender and rural-urban gaps, millions of primary-school-age girls and boys remain out of school mainly due to a lack of access. Since the ban on female secondary school attendance was imposed, only 3% of girls attend secondary school. Among boys aged 13-18, only 44% are receiving a secondary education, World Bank said.

“Afghanistan’s future growth potential hinges on improving human capital. What is happening to secondary education is a cause of grave concern,” added Good. “Almost no girls and less than half of the country’s boys are getting a secondary education. Where will the teachers and doctors of tomorrow come from? A country cannot grow if it willingly foregoes the potential of its citizens.”

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Ministries of Public Health and Higher Education sign cooperation agreement

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The Ministry of Public Health announced on Tuesday it has signed a cooperation agreement with the Ministry of Higher Education aimed at expanding scientific, research, educational, and technical cooperation.

At the signing ceremony held in Kabul, Noor Jalal Jalali, Minister of Public Health, said that the agreement would lead to significant improvements in the capacity-building of students and doctors, ensure that research is conducted based on evidence, and enable the collection of accurate data.

Meanwhile, Neda Mohammad Nadeem, Minister of Higher Education, described the agreement as beneficial to the public and to both institutions, stressing the need to train individuals at universities who can contribute to social development and make the country self-sufficient in the public health sector.

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UNAMA holds new round of Working Group meetings on counter-narcotics and private sector

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The United Nations Assistance Mission in Afghanistan (UNAMA) has convened a new round of Doha Process Working Group meetings focusing on counter-narcotics and private sector development.

The meetings, held in Kabul on February 3 and 9, brought together representatives of UN member states and international organizations, officials of the Islamic Emirate, and subject-matter experts.

According to UNAMA, discussions in the counter-narcotics working group centered on efforts by Islamic Emirate authorities and the international community to support alternative livelihoods for Afghans previously dependent on poppy cultivation and the illicit opium trade. Participants also reviewed drug-use prevention and treatment initiatives, as well as law-enforcement measures to curb narcotics production and trafficking.

The private sector working group focused on job creation and entrepreneurship, with particular attention to women’s participation in the private sector, market integration, access to finance, and the development of private banking and financial infrastructure.

UNAMA said both working groups identified priority areas for enhanced engagement and explored more effective and sustainable approaches to supporting Afghan men and women. Participants also examined the linkages between the two areas, noting that private sector development is a key source of livelihoods, while counter-narcotics efforts contribute to Afghanistan’s economic and social stability.

The working groups were established following the third Meeting of Special Envoys held in Doha, Qatar, in June and July 2024, in line with recommendations of the Independent Assessment endorsed by the UN Security Council. The process aims to promote more coherent, coordinated, and structured engagement with Afghanistan’s de facto authorities for the benefit of the Afghan people.

UNAMA added that stakeholders engage in the working groups on an ongoing basis, with full-format meetings convened periodically. Since their establishment, the groups have improved information-sharing, helped mobilize additional resources, and facilitated expert exchanges to strengthen support for the Afghan people.

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Economic Commission approves national policy for development of agriculture

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At a regular meeting of the Economic Commission chaired by Mullah Abdul Ghani Baradar, Deputy Prime Minister for Economic Affairs, the National Policy for the Development of the Agriculture and Livestock Sector was approved.

According to a statement from the deputy PM’s office, the key objectives of the policy include the mechanization of the agriculture and livestock sector; development of agricultural, irrigation, and livestock research and extension systems; management of irrigation systems; support for investment in these sectors; and ensuring public access to high-quality agricultural and animal products.

During the same meeting, the development plan for the fish farming sector was also approved.

Under this plan, through private sector investment, 7,700 small, medium, and large fish production and farming facilities will be established on 6,500 hectares of land in various parts of the country.

The statement added that the implementation of this plan will create direct employment opportunities for 50,000 people and indirect employment for 250,000 others.

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