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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.

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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.

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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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UAE firm eyes investment in Salang’s second tunnel and pharmaceutical factories

The proposals will be submitted to the Inter-Ministerial Investment Committee for further review and discussion.

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A United Arab Emirates-based company, HHM Global Industry Group, has expressed interest in investing in the construction of the second Salang Tunnel and establishing pharmaceutical factories in Afghanistan.

The issue was discussed at a regular meeting of the Inter-Ministerial Investment Committee, held on September 8, 2026, at the Marble Palace under the Economic Deputy Office of the Prime Minister’s Office.

The committee welcomed the company’s interest in investing in Afghanistan and assured its representatives that the relevant ministries and government agencies are prepared to provide comprehensive cooperation.

Following extensive discussions, company officials were asked to prepare detailed investment proposals for the construction of the second Salang Tunnel, pharmaceutical manufacturing facilities, as well as other potential investment projects.

The proposals will be submitted to the Inter-Ministerial Investment Committee for further review and discussion.

If implemented, the proposed investments could contribute to the development of Afghanistan’s transport infrastructure and strengthen domestic pharmaceutical production.

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Saudi energy group signs major Afghanistan deals covering gas exploration and pipeline plans

The agreements cover exploration across the Kushk and Tirpul contract area in Herat, spanning approximately 23,317 square kilometers.

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Saudi Arabia’s Delta Energy Group has signed a series of agreements with Afghanistan’s Ministry of Mines and Petroleum covering hydrocarbon exploration, natural gas utilization in Herat and a proposed regional gas pipeline.

According to a statement issued by Delta Energy on September 6, the agreements cover exploration across the Kushk and Tirpul contract area in Herat, spanning approximately 23,317 square kilometers.

Under the agreements, Delta Energy will conduct geological and geophysical studies, seismic surveys, exploration drilling and reservoir evaluations to determine the scale and commercial potential of Afghanistan’s hydrocarbon resources.

The company will also finance a study on the utilization of natural gas for Herat Industrial Park, Herat city and other approved areas, including potential applications in industry and power generation.

A separate agreement provides a framework to assess the proposed 700-kilometre CentGas “Corridor of Prosperity” pipeline, which would potentially connect a gas receipt point near Guzara district in Herat with a delivery point near Spin Boldak in Kandahar.

Delta Energy estimates the proposed pipeline could require about $10 billion in investment over 10 years, subject to technical and economic feasibility, financing, regulatory approvals and a final investment decision.

The company said the broader integrated programme could represent tens of billions of dollars in potential investment over the coming years, covering exploration, field development, gas utilization and related infrastructure. However, all subsequent phases will depend on exploration results, commercial viability, financing and required approvals.

Sheikh Badr Mohammed Al-Aiban, chairman of Delta International Holding Group, said the project was more than an oil and gas investment, describing it as an opportunity to develop an integrated energy ecosystem that could create jobs, support industry and improve regional connectivity.

Afghanistan’s Minister of Mines and Petroleum, Hidayatullah Badri, welcomed the agreements, saying cooperation with Delta Energy could help advance exploration of the country’s hydrocarbon resources, strengthen energy security and support economic activity.

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