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Afghanistan’s economy shows modest growth but recovery remains fragile
The Afghan economy is showing signs of moderate growth, but still faces significant challenges, including fiscal constraints, trade imbalances, and a limited capacity for public investment, the World Bank (WB) said Wednesday.
According to the organization’s latest Afghanistan Development Update, issued on Wednesday, “Afghanistan’s economic recovery remains uncertain”.
Modest GDP growth of 2.7%, driven by private consumption, has recouped only about 10% of past economic losses, indicative of the slow and fragile nature of the recovery, the WB said.
According to the organization, this level of growth has done little to address deeper structural issues and significant vulnerabilities within Afghanistan’s economy.
“Enabling women’s participation in the economy, strengthening domestic resource mobilization, maintaining price stability, and addressing critical deficits in human capital – particularly in education and healthcare, and especially for women – will be essential for long-term recovery and reducing vulnerability to future shocks,” the WB said in a statement.
Faris Hadad-Zervos, World Bank Country Director for Afghanistan said: “Afghanistan’s long-term growth prospects depend on tapping into the substantial potential of the domestic private sector and improving the overall business environment.
“Key to this is increased investment, providing access to finance to small businesses, and supporting educated and skilled women entrepreneurs so their businesses can thrive. Without this, the country risks prolonged stagnation with limited prospects for sustainable development,” he said.
Meanwhile, the partial recovery, coupled with falling food prices, has contributed to a gradual improvement in household welfare.
But most Afghan households continue to struggle to meet basic needs and poverty remains widespread.
“Vulnerable groups, including women, children, and displaced populations, continue to bear the brunt of the economic hardship, due to the lack of social protection mechanisms,” the WB stated.
In addition, Afghanistan’s trade dynamics remain a significant challenge.
In 2023-24, the country’s exports remained stable, but imports surged, leading to a widening trade deficit, the WB reported.
The appreciation of the afghani (AFN) made imports cheaper, fueling demand for foreign goods, while domestic industrial activity revived, increasing the need for imported inputs.
However, the trade deficit, exacerbated by Afghanistan’s reliance on imports for essential goods like fuel, food, and machinery, might pose a risk to the country’s economic stability, the organization stated.
Meanwhile, Deputy Minister of Economy Abdul Latif Nazari said that Afghanistan’s economy has a clear outlook and the current problems are caused by sanctions and the freezing of the country’s foreign exchange reserves.
“Afghanistan’s economic outlook is bright and hopeful. Some of the economic problems that exist are due to sanctions, banking restrictions and the freezing of assets of the Afghan people,” Nazari added.
“Our effort is to free the property of the people of Afghanistan as soon as possible and use it in line with the economic growth and development of the country.”
The Ministry of Foreign Affairs of the Islamic Emirate of Afghanistan announced on Tuesday the release of American citizen Dennis Coyle from prison.
According to the ministry, Coyle’s mother had written to the leader of the Islamic Emirate demanding amnesty and the release of her son on the occasion of Eid. The Supreme Court considered time served sufficient and decided to release him.
The Ministry of Foreign Affairs stated that this action was carried out on the basis of humanitarianism and good faith, and it believes that such measures can strengthen trust between countries. The ministry also expressed hope that both countries, in the future, can find solutions to remaining issues through mutual understanding and constructive dialogue.
The Islamic Emirate also expressed appreciation for the cooperation of the United Arab Emirates in this matter.
Separately, for Coyle’s release, an American delegation, including Zalmay Khalilzad, former U.S. Special Representative for Afghanistan, met on Tuesday with Amir Khan Muttaqi, the Foreign Minister of the Islamic Emirate.
The meeting was also attended by Saif Mohammed Al-Ketbi, Ambassador of the UAE in Kabul, and a member of the prisoner’s family.
According to the Ministry of Foreign Affairs, Muttaqi stated that the Islamic Emirate has not detained any citizen of any country to achieve political objectives; rather, detentions were the result of legal violations, and individuals were released after completing judicial procedures.
At the meeting, Khalilzad praised the action of the Islamic Emirate and emphasized the importance of continuing discussions on all issues between the two countries, expressing hope for further progress in the future.
Muttaqi also stressed that Kabul and the UAE should provide standard consular services to their citizens, and that the Afghan government is fully prepared in this regard.
He thanked Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE, for their constructive role in facilitating the release of the prisoner and referred to the UAE as a close friend of Afghanistan.
Earlier, Muttaqi had also praised the role of the State of Qatar in facilitating information exchange between the Islamic Emirate and the prisoner’s family.
Additionally, the UAE ambassador expressed his country’s readiness to play a role in humanitarian institutions and called such developments beneficial for everyone.
The United Kingdom has announced an additional £3 million (AFN 257 million) in humanitarian assistance to Afghanistan, aimed at supporting people affected by natural disasters and other shocks.
Richard Lindsay, in a post on X, said the funding will be used to provide essential nutrition supplies and related support to vulnerable populations.
The new allocation brings the UK’s total bilateral assistance to Afghanistan for the current financial year to £154 million (AFN 13.18 billion).
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Around 2.3 million tourists visited Afghanistan’s recreational areas during Eid: Ghufran
Khubaib Ghufran, spokesperson for the Ministry of Information and Culture, announced on Tuesday that over Eid al-Fitr holidays approximately 2.3 million domestic and foreign tourists visited the country’s recreational areas and natural attractions.
Ghufran said this level of tourist presence shows a significant increase compared to previous years and indicates growth and strengthening of the tourism sector.
Meanwhile, officials from the ministry’s departments, while emphasizing public cooperation in preserving the environment, maintaining cleanliness in public places, and protecting tourist attractions, stated that through extensive cooperation and efforts by security institutions, tourists were able to travel to different parts of the country with full confidence during the Eid holidays.
According to Ghufran, the Ministry of Information and Culture is working to develop and strengthen the tourism sector across the country and to provide more facilities and conveniences for tourists.
However, some tourists who traveled to various provinces praised the order, security, and hospitality of the people. They said that all provinces of Afghanistan have always been beautiful, but this year, with the current level of security and tourism facilities, their trips have become even more memorable.
Islamic Emirate releases American prisoner Dennis Coyle
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Around 2.3 million tourists visited Afghanistan’s recreational areas during Eid: Ghufran
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