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Afghanistan’s economic prospects are bleak: World Bank

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The absence of GDP growth coupled with declining external financing avenues for off-budget expenditures paint a bleak picture of Afghanistan’s economic prospects, the World Bank said.

After a severe 20.7 percent GDP contraction in 2021, the Afghan economy contracted further by 6.2 percent in 2022, the bank said in a report.

“While Afghanistan’s agricultural and subsistence economy, including illicit opium production, provided some resilience in rural areas, higher prices, reduced demand, lower employment, and disruptions to services had severe impacts across the country,” it said.

The proportion of households that did not have enough income to meet basic food needs more than doubled from 16 percent to 36 percent in this period, according to the bank.

In the context of deep concerns about the policies of the Islamic Emirate of Afghanistan (IEA), including restrictions imposed on women and girls, the international community, including the World Bank, recalibrated its approach to supporting Afghanistan: first to providing humanitarian support and then to providing off-budget support for basic service delivery and livelihoods.

However, IEA moved to restore domestic revenues, which reached $2.2 billion or 15 percent of GDP in 2022. “Nevertheless, overall economic activity remained depressed, unemployment stayed high, and the banking sector was dysfunctional due to constraints on international transfers and concerns about liquidity and solvency.”

World Bank said that Afghanistan’s economic outlook remains uncertain, with the threat of stagnation looming large until at least 2025. “This economic stagnation will deepen poverty and unemployment, with job opportunities expected to decrease and food insecurity expected to increase.”

The bank noted that for a sustainable future, Afghanistan needs to focus on its comparative advantages, particularly in the agricultural and extractive sectors. Agriculture could be a key driver of growth and poverty reduction, with the potential to create jobs, it added.

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TAPI gas deliveries to Afghanistan and Pakistan expected to begin in 2027

Turkmenistan regards TAPI as a key project for diversifying its gas exports and strengthening regional economic cooperation.

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Turkmenistan expects natural gas supplies to Afghanistan and Pakistan through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline to begin in 2027, according to the Turkmen Embassy in Islamabad.

Turkmen Ambassador Atajan Movlamov said construction of the strategically important Serhetabat-Herat section of the pipeline is expected to be completed by the end of this year.

Movlamov made the remarks during an Ambassadors’ Dinner hosted by the Lahore Chamber of Commerce and Industry in Islamabad.

He said the implementation of TAPI and other regional energy projects could strengthen Pakistan’s energy security while creating new opportunities for industrial development and economic growth.

The planned 1,800-kilometre pipeline is designed to transport up to 33 billion cubic metres of natural gas annually from Turkmenistan’s giant Galkynysh gas field through Afghanistan to Pakistan and India.

Turkmenistan regards TAPI as a key project for diversifying its gas exports and strengthening regional economic cooperation.

The Galkynysh field, which is the main resource base for TAPI, is among the world’s largest gas fields, with estimated reserves of more than 27 trillion cubic metres.

The project has faced years of delays, but recent construction and developments in the regional energy sector have renewed attention to TAPI as a potential link between Central Asian gas resources and South Asian energy markets.

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Dogharoun handles 60% of Iran’s exports to Afghanistan

Modoudi invited machinery manufacturing companies in Iran to establish operations in the area.

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Mohammadreza Modoudi, CEO of the Dogharoon Free Zone, has criticized what he described as the neglect of Dogharoun’s potential, saying Iran ranks first among all countries in terms of exports of goods to Afghanistan.

He said 60 percent of this large volume of exports passes through the Dogharoun border crossing, adding that, despite this, the region’s significant potential has been overlooked.

Modoudi invited machinery manufacturing companies in Iran to establish operations in the area.

He said it is time to take a realistic approach and transform Dogharoun from a transit route into a major hub for production, value-chain development and a driving force for international trade.

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EU and FAO launch €5m programme to strengthen Afghanistan’s agrifood sector

FAO Representative in Afghanistan Richard Trenchard said agrifood businesses had shown potential to grow and create jobs despite difficult conditions.

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The European Union (EU) and the Food and Agriculture Organization of the United Nations (FAO) have launched a €5 million initiative to help Afghan farmers and agribusinesses access markets, improve incomes and withstand climate and economic shocks.

The programme will target vulnerable households, including returnees, internally displaced people and host communities, particularly in areas affected by food insecurity, climate risks and limited economic opportunities. Women and youth will be key beneficiaries.

Four one-stop service hubs will connect farmers and rural entrepreneurs with agricultural advice, specialised services, businesses and markets. Farmers will also gain access to FAO climate analysis and early-warning information to help them make timely production and marketing decisions.

The initiative will restore 2,000 hectares of degraded forests and rangelands and support 250 women- and community-led nurseries, combining environmental protection with new livelihood opportunities.

FAO will also provide matching grants and technical and business support to established agrifood and environmentally sustainable enterprises with growth potential. Participating businesses will contribute their own resources, helping expand processing, source from more local farmers and create rural jobs.

Nicola Bellomo, the EU’s new Chargé d’Affaires for Afghanistan, said the programme reflected the EU’s commitment to food security and economic empowerment.

“Afghanistan’s agricultural potential remains undervalued and constrained by the country’s extreme climate vulnerability,” Bellomo said, adding that the partnership would strengthen agricultural services, support agribusiness growth and promote nature-based solutions.

FAO Representative in Afghanistan Richard Trenchard said agrifood businesses had shown potential to grow and create jobs despite difficult conditions.

“When farmers can produce with confidence, businesses can grow and products can reach markets, agriculture becomes a powerful engine for recovery and resilience,” he said.

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