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Outlook for Afghan economy ‘dire’ as household incomes shrink: World Bank

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The outlook for Afghanistan’s economy is dire with per capita income having fallen by over a third in the last four months of 2021 after the Islamic Emirate of Afghanistan (IEA) seized power and foreign forces withdrew, the World Bank said on Wednesday.

“One of the poorest countries in the world has become much poorer,” said Tobias Haque, World Bank Senior Country Economist for Afghanistan.

“The isolation of the Afghan economy following last August’s political crisis risks…leading to grave poverty, displacement, fragility, and extremism threats,” he told a briefing for the release of the World Bank’s first development update on the country since August Reuters reported.

The IEA takeover prompted foreign governments, led by the United States, to cut development and security aid, and the strict enforcement of sanctions has debilitated the country’s banking sector.

The World Bank update said that incomes had dropped so starkly that around 37% of Afghan households did not have enough money to cover food while 33% could afford food but nothing more, Reuters reported.

An IEA failure to meet Western conditions, in particular access to education for all girls, has led the international community to withhold international assistance and keep financial sanctions in place, with exceptions for humanitarian aid.

“Under current conditions, the outlook for Afghanistan’s economy is dire,” the World Bank said in a statement accompanying the update.

If current conditions continued, the World Bank predicted, Afghanistan’s real gross domestic produce (GDP) per capita would decline by around 34% between the end of 2020 and the end of 2022, reversing all progress since 2007.

The United States cancelled planned meetings in March, some of which would have included the World Bank, to discuss key economic issues after the IEA sent all high school-aged girls home after they had arrived ready for classes.

The U-turn angered donors, foreign governments and many Afghans as IEA officials had previously said they were opening all schools.

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Haqqani, Qatari envoy hold talks on expanding bilateral relations

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Khalifa Sirajuddin Haqqani, Minister of Interior Affairs, held talks with Mirdif Al-Qashouti, Qatar’s ambassador to Kabul, on expanding bilateral relations between Afghanistan and Qatar, regional developments, and strengthening Afghanistan’s engagement with the international community.

According to the Afghan Ministry of Interior, Haqqani praised Qatar’s constructive role in supporting Afghanistan’s engagement with the international community and thanked Doha for its continued cooperation.

The two sides also discussed security cooperation and joint efforts to combat drug trafficking.

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China resumes work on highway project in Tajikistan close to Afghan border

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Chinese workers have resumed construction on a key highway project in Tajikistan near the border with Afghanistan after a months-long suspension prompted by security concerns, according to Eurasianet.

Officials from Tajikistan’s Ministry of Transport confirmed that work has restarted on a 109-kilometre section of the Dushanbe–Kulma highway.

Construction reportedly resumed in April after authorities assured Beijing that additional security measures would be put in place to protect Chinese personnel involved in the project.

The project had been paused in late 2025 after China advised its citizens to withdraw from border regions following a series of violent incidents.

The advisory followed an attack in November on a road construction crew that left two people dead and two others injured. In a separate incident later that year, three Chinese nationals were also killed.

Tajik authorities initially attributed both attacks to militant groups, though those claims have not been independently verified.

According to the report, Chinese workers currently on site are being protected by Tajik special forces. Tajikistan’s Defence Ministry has also indicated that joint military exercises between Tajik and Chinese forces are expected to take place in September.

The renewed construction and security cooperation come after the signing of a Treaty of Friendship between Tajikistan and China in May, which paved the way for agreements worth around $8 billion involving Chinese entities.

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Hanafi says war is not the solution, calls for regional cooperation and investment

Hanafi said the policy of the Islamic Emirate is based on peaceful coexistence with all countries, founded on mutual respect and non-interference in each other’s internal affairs.

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Abdul Salam Hanafi, Deputy Prime Minister for Administrative Affairs, said on Wednesday that no neighboring country can destroy another through conflict, stressing that war only brings losses for all sides and is not a solution to disputes in the 21st century.

Speaking at the opening ceremony of the fifth National and International Industry and Mines Week Exhibition in Kabul, Hanafi urged countries to channel their resources toward development and economic progress rather than conflict.

“If we fight each other, we will spend all our energy destroying one another. Why should we not use our energy in this century for the progress of our nations?” Hanafi said.

Referring to the lessons of the world wars, he said many countries that were once engaged in conflict have since concluded that war is ineffective and have instead embraced cooperation, reconstruction, and development.

Hanafi said the policy of the Islamic Emirate is based on peaceful coexistence with all countries, founded on mutual respect and non-interference in each other’s internal affairs.

He reiterated that, under the Islamic Emirate’s policy, no individual or group is permitted to use Afghan territory to threaten or launch attacks against other countries. Likewise, he said, no country has the right to interfere in Afghanistan’s domestic affairs.

Turning to the economy, Hanafi said the exhibition highlights the continued growth of Afghanistan’s industrial sector despite decades of conflict that have left the country economically vulnerable.

He said the Islamic Emirate is working to reduce the long-term effects of war by expanding trade and strengthening domestic production, with the goal of transforming Afghanistan from an import-dependent economy into an export-oriented one.

According to Hanafi, authorities have introduced around 25 incentives for industrialists across various sectors, including the allocation of industrial land, tax exemptions, and other measures aimed at encouraging investment and boosting production.

He also called on domestic and foreign investors to take advantage of investment opportunities in Afghanistan, particularly in the country’s mining sector and other key industries.

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