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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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Afghanistan, Uzbekistan sign 13 trade MoUs worth over $100 million

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Thirteen trade and investment memorandums of understanding (MoUs) worth more than $100 million were signed between private sector representatives of Afghanistan and Uzbekistan during a conference held in Kabul on Saturday.

The conference, which brought together business leaders and officials from both countries, focused on expanding bilateral economic cooperation, increasing trade volume, and identifying new investment opportunities.

Speaking at the event, Nooruddin Azizi, Minister of Industry and Commerce of Afghanistan, said economic relations between Afghanistan and Uzbekistan have gained notable momentum in recent months. He stressed that Afghanistan is actively working to strengthen regional trade ties and create a more favorable environment for investors.

Azizi added that Afghanistan offers significant investment potential, particularly due to its available workforce and emerging opportunities across multiple sectors, and is ready to welcome joint ventures with foreign partners.

Officials from the Ministry of Industry and Commerce of Afghanistan said the government has facilitated around $2 billion in investment across various sectors over the past year, reflecting growing investor interest in the country’s economy.

The Uzbek delegation also reiterated its commitment to expanding economic relations with Afghanistan, describing the agreements as an important step toward deeper regional cooperation.

Amanbay Orynbayev, head of Uzbekistan’s Karakalpakstan delegation, said his country places strong emphasis on long-term, transparent, and reliable economic partnerships. He encouraged Afghan traders to take advantage of joint investment opportunities to access new regional markets.

The Afghan private sector welcomed the agreements, expressing hope that increased trade engagement and business exchanges will further strengthen economic ties between the two neighboring countries.

Officials noted that the total value of agreements signed between Afghanistan and Uzbekistan has now exceeded $1.5 billion. If implemented effectively, these commitments are expected to contribute to increased trade flows and broader economic growth in Afghanistan.

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New Afghanistan-China transport corridor launched via Turkmenistan

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A new multimodal freight corridor linking China and Afghanistan via Turkmenistan has been officially launched, aiming to improve the speed and efficiency of overland cargo transportation across Central Asia.

According to the Turkmenistan Embassy in London, the country has become part of a newly established route designed to accelerate freight deliveries between China and Afghanistan.

The corridor, developed with the involvement of Uzbekistan Railways’ subsidiary Uztemiryulcontainer, covers approximately 7,400 kilometers and is expected to reduce transit time to around 30 days, improving overall logistics efficiency.

Under the new route, containers are transported by rail from China through the Altynkol station in Kazakhstan, continuing via Uzbekistan to a logistics hub in Bukhara. From there, cargo is transferred to road transport and moved across Turkmenistan before reaching Herat in Afghanistan.

Officials say the new system integrates rail and road networks into a unified logistics chain, making transport more predictable and efficient.

 

 

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Uzbekistan launches new cargo corridor linking China and Afghanistan

From Uzbekistan, shipments will be transferred onto trucks and transported across Turkmenistan en route to Herat in western Afghanistan.

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Uzbekistan’s national railway operator has announced the launch of a new multimodal freight route designed to strengthen logistics links between China and Afghanistan via Central Asia.

According to Trend news agency the new corridor will see container used goods transported by rail from China through Kazakhstan’s Altynkol station into Uzbekistan. Cargo will then be handled at the Bukhara logistics centre, operated by Uztemiryulkonteyner, before continuing its journey by road.

From Uzbekistan, shipments will be transferred onto trucks and transported across Turkmenistan en route to Herat in western Afghanistan.

Previously, freight along this trade corridor was largely routed via sea from China to Iran’s Bandar Abbas port, before continuing overland into Afghanistan. The new overland alternative is expected to streamline logistics and improve reliability.

Covering approximately 7,400 kilometres, the route is projected to reduce transit times to around 30 days, offering a more efficient option for regional cargo movement between East Asia and South Asia.

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