Business
Afghanistan’s growth prospects remain uncertain amid global uncertainty: World Bank report
According to the report, in Afghanistan, despite aid cuts, the economy is estimated to have grown by 2.5 percent in FY24-25, which was slower than the pace of population growth.
Amid increasing uncertainty in the global economy, South Asia’s growth prospects have weakened, with projections downgraded in most countries in the region, including Afghanistan.
Stepping up domestic revenue mobilization could help the region strengthen fragile fiscal positions and increase resilience against future shocks, said the World Bank in its twice-yearly regional outlook – the South Asia Development Update – which was released on Wednesday.
According to the report, in Afghanistan, despite aid cuts, the economy is estimated to have grown by 2.5 percent in FY24-25, which was slower than the pace of population growth.
Growth is forecast to increase only moderately to 2.2 percent in 2025/26, the World Bank report stated.
Coinciding with the release of the South Asia report was the World Bank’s Afghanistan Development Update report which explained the situation in more detail.
Stating that while the country’s economy is gradually recovering, the outlook remains uncertain due to growing fiscal pressures, a widening trade deficit and persistent poverty and food insecurity.
The report stated that these factors continue to strain households and hinder inclusive growth.
However, Afghanistan recorded its second consecutive year of growth in 2024, the World Bank stated, adding that the recovery was largely driven by the agriculture sector.
Manufacturing and services remained subdued due to an unfavorable business environment, persistent export barriers and declining foreign aid.
Modest gains in private consumption and real estate investment contributed to growth, the report stated, adding that rising imports widened the trade deficit, increasing external vulnerabilities.
At the same time, rapid population growth and the return of refugees continue to strain job creation and public service delivery, further deepening the fragility of the economy.
Deflation meanwhile persisted in 2024, with food prices having declined sharply. Non-food inflation remained stable. Persistent deflation continued in 2024,
Poverty, food insecurity, and malnutrition however remained pressing challenges and despite modest wage growth, high unemployment and restrictions on women continue to strain livelihoods, the report stated.
Early this year, 14.8 million people faced food shortages, while acute malnutrition – now affecting 4.7 million women and children – is worsening. The World Bank warned that without urgent action, human capital development will be further undermined.
Fiscal pressures meanwhile remained high as domestic revenue mobilization, though relatively strong, is insufficient to offset the sharp decline in aid.
The report also stated that exports declined in 2024, while imports surged – widening the trade deficit.
The increase in imports however was driven by rising industrial demand and substitution of domestic consumer goods.
The afghani (AFN) currency, which had appreciated significantly in 2023 due to strong foreign inflows stabilized with slight depreciation in 2024 but the banking sector remained fragile.
The World Bank reported that economic growth is expected to slow to 2.2 percent in 2025 amid aid disruptions, before gradually recovering to 2.5 percent in 2026–27.
The organization however warned that while Afghanistan’s youth remain a vital source of resilience and untapped potential, urgent action to expand job opportunities for them is needed.
Business
Russia almost doubles LPG exports to Central Asia, Afghanistan this year
Russia has almost doubled exports of liquefied petroleum gas in the January – November period to ex-Soviet republics in Central Asia and Afghanistan to 1.016 million metric tons, Reuters reported citing sources on Friday.
Moscow has had to divert supplies of LPG, or propane and butane, from Europe, which introduced restrictions on LPG imports from Russia in December 2024 over the war in Ukraine.
Traders said supplies to Afghanistan, as well as to Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan now account for around 36% of Russia’s total LPG exports, up from 19% in 2024.
Afghanistan is Russia’s largest buyer of LPG in that region. In July, Russia accepted the credentials of a new ambassador of Afghanistan, making it the first nation to recognise the country’s Islamic Emirate government.
According to the sources, supplies of Russia’s LPG to the country, including from Kazrosgaz, a joint venture with Kazakhstan, have jumped 1.5 times in the first 11 months of the year to 418,000 tons.
Traders said that Russia’s LPG supplies to Afghanistan have increased partially at the expense of declining supplies from Iran, which has been sanctioned by the United States.
Business
Major power projects launched in Herat
Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.
Mullah Abdul Ghani Baradar, Deputy Prime Minister for Economic Affairs, on Thursday announced the launch of four major electricity projects and the inauguration of five others in Herat province, with a total investment valued at 3.98 billion afghanis.
Speaking at an official ceremony, Baradar described the projects as vital for Afghanistan’s industrial and economic development. He said that once completed, the projects will provide 24/7 electricity to all industrial parks in Herat, as well as to commercial centers, rural areas, and residential neighborhoods, ensuring stable and reliable power supply.
Baradar also pledged incentives for investors in cold storage facilities, announcing a five-year tax exemption and guaranteeing uninterrupted electricity supply by Afghanistan’s power utility. He encouraged both domestic and foreign investors to take advantage of these opportunities.
Emphasizing the Islamic Emirate’s balanced foreign policy, Baradar said the government’s main focus remains economic growth, security stability, and good governance, urging the international community to pursue engagement with Afghanistan instead of restrictive policies.
Among the projects inaugurated is a 130-kilometer-long 220-kilovolt power transmission line from Turkmenistan, along with the construction of four substations in the districts of Karukh, Pashtun Zarghun, Obey, and Chesht-e-Sharif, which will supply electricity to around 40,000 households.
Newly launched projects include the construction of the Pul-e-Hashemi substation, expansion of the 24 Hoot Martyrs substation, creation of a second line at the Noor-ul-Jihad substation, and the extension of power transmission lines linking the Pul-e-Hashemi, Noor-ul-Jihad, and 24 Hoot Martyrs substations.
Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.
Business
Sharp drop in exports to Afghanistan drives Pakistan’s trade deficit surge
Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.
Recent data from Pakistan’s central bank reveals that a sharp decline in exports to Afghanistan has become a key factor behind the country’s growing trade deficit, challenging previous claims by Pakistani officials that halting trade with Afghanistan would not harm their economy.
According to the State Bank of Pakistan, the trade deficit with nine neighboring countries increased by more than 39 percent in the first five months of the 2025–2026 fiscal year, rising from $4.4 billion to $6.2 billion. The report highlights that reduced exports to countries such as China and Afghanistan played a central role in this increase.
Exports from Pakistan to Afghanistan fell dramatically by over 94 percent during this period, dropping from $408 million last year to approximately $210 million. Economic analysts note that Afghanistan has historically been one of Pakistan’s key export markets, particularly for food items, cement, medicine, and daily-use goods—products that cannot be easily replaced.
The steep decline follows the complete suspension of trade between the two countries in October 2025. Despite previous statements by Pakistani officials asserting that reduced or halted trade with Afghanistan would not negatively impact Pakistan’s economy, the latest figures suggest otherwise.
Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.
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