Business
Afghanistan’s GDP to expand by 3% in 2021: ADB
The Asian Development Bank (ADB) forecasts that Afghanistan’s gross domestic product GDP growth will increase by 3% in 2021 and 4% in 2022 after the normalization of business activity and market sentiment.
In its Asian Development Outlook (ADO) 2021 released on Wednesday, the ADB stated that Afghanistan’s economic growth is expected to recover this year and accelerate next year after a sharp decline in 2020 from the coronavirus disease (COVID-19) pandemic and continued violence and instability.
“Afghanistan’s economy experienced unprecedented disruption in 2020 due to COVID-19 pandemic, political instability and continued violence, which cut remittances, trade, and revenue,” said ADB Country Director for Afghanistan Narendra Singru.
“With a successful COVID-19 vaccine rollout and post-pandemic recovery, the country should be on track to achieve economic growth this year and in 2022 as business activity and market sentiment normalize,” Singru said.
According to the report, inflation more than doubled from 2.3% in 2019 to 5.6% in 2020 driven by higher food prices. Food price inflation in 2020 was estimated at 10% with the highest spike recorded in April when border closure and panic buying propelled it to 16.6%. Inflation is projected to moderate to 5.0% in 2021 and 4.0% in 2022 as food supplies improve.
However, risks remain, including implementing vaccinations in remote and insecure areas, conflict, criminality, corruption, political instability, and broader social fragility. If unaddressed, these could weigh heavily on the economy and impede recovery.
“Supporting the recovery of micro, small, and medium-sized enterprises (MSMEs) hard hit by the pandemic is pivotal to safeguarding workers’ incomes and livelihoods, according to the report. Before the pandemic, MSMEs were estimated to provide nearly 1.6 million service and industry jobs. The government approved a 2-year support package worth $295 million in October 2020 to improve business conditions and implemented countercyclical measures that include support for MSMEs,” the report read.
The ADB suggests that Afghanistan should facilitate MSME access to markets by developing infrastructure, improving security, combating corruption, simplifying regulation, strengthening property rights and contract enforcement, and promoting innovation and better labor skills in order to improve the business environment.
“Increasing access to credit and further expanding the formal bank sector is also crucial,” the organization said.
“ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region,” the report concluded.
Nooruddin Azizi, Acting Minister of Commerce and Industry, met with representatives from the ministries of foreign affairs, defense and interior of Malaysia, along with other senior officials, on Wednesday and called on Malaysians to invest in Afghanistan.
The visiting delegation is being led by senior diplomat Dr. Shazelina Zainul Abidin.
According to the IEA’s foreign ministry, the two sides discussed bilateral trade, holding a business communication conference to strengthen trade relations between the two countries, the trade balance between Afghanistan and Malaysia, and creating a market for Afghan products, including carpets, cotton, and minerals.
According to the ministry, at the end of the meeting, the Acting Minister emphasized the increase of investment from regional countries in Afghanistan and called on Malaysian investors to also invest in Afghanistan.
The Ministry of Interior says that Afghanistan has started exporting goods to Turkey via the Herat-Khaf railway line.
In a post on X, the ministry said: “Afghanistan’s exports to Turkey started in a calm atmosphere through the Herat-Khaf railway line.”
The ministry added that one train will run daily for a month and then two trains will run daily.
According to the ministry, the security of Khaf-Herat railway line is provided by the guards of the National Public Protection Agency.
Khaf-Herat railway project not only connects Iran and Afghanistan by rail, but also completes a 2,000-kilometer route along the east-west rail corridor from China, through Uzbekistan, to Afghanistan, to Iran, and on to Turkey and Europe.
As a landlocked country, this railway network will provide a safe route to connect with Europe via Iran’s railway network and Iran’s southern ports.
This railway line is strategic for trade between Iran and Afghanistan and will allow six million tons of goods to be sent between the two countries.
A joint expo between Afghanistan and Kazakhstan will be held in Kabul in the next four days, officials said on Sunday.
Officials of the Ministry of Industry and Commerce said that the two-day expo will be held for the purpose of expanding and strengthening trade relations between the two countries.
“This expo will be held as a follow-up of the Kazakh-Afghan international expo, which was held in the city of Astana, Kazakhstan, with the participation of a large delegation of the government and the private sector of the Islamic Emirate of Afghanistan,” Abdulsalam Javad Akhundzadeh, the spokesman of the Ministry of Industry and Commerce, said.
“At this expo, domestic products from different sectors of Afghanistan and the Republic of Kazakhstan will be put on display for two days.”
According to officials, 40 large Kazakh companies, and 40 large Afghan companies will exhibit their products.
Mohammad Saber Latifi, head of the Afghanistan International Expo Center, said that fruits, minerals and commercial services will be displayed at the expo.
During the expo, various memorandums of understanding for the trade of goods are also expected to be signed by companies.
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