KABUL (Pajhwok): The World Bank says the Afghan economy is expected to hover around no-growth territory this year, amid uncertainty after contracting by 25 percent since August 2021.
In its latest report, WB says the caretaker government’s restrictive policies on women’s education and work would further lower Afghanistan’s growth prospects.
“Afghanistan’s economy is fragile, relies heavily on external support and its private sector is weak,” said Melinda Good, World Bank Country Director for Afghanistan. “To recover, the country needs to prioritize spending on human capital, basic services and climate resilience and address harmful gender policies.”
This report titled Uncertainty After Fleeting Stability, shows how Afghanistan’s economic downturn has affected all sectors. Services, which make up 45 percent of the country’s GDP, shrank by 6.5 percent last year, following a staggering 30 percent drop in 202.
The agriculture sector, which accounts for 36 percent of GDP, declined by 6.6 percent in 2022 due to unfavorable weather conditions and farmers’ lack of resources to cope. The industrial sector also saw a contraction of 5.7 percent last year, as businesses—especially those owned by women—faced closures due to limited access to resources and financial challenges. Following a record high in 2022, exports have been declining this year while imports remain robust, resulting in a growing trade deficit.
Although deflation may initially increase real wages, prolonged deflation could stifle business growth and increase unemployment. A potential reduction in international aid due to fiscal pressures in donor countries and the restrictive policies on women and girls pose risks to Afghanistan’s recovery, as do concerns about stability of the banking sector and dysfunctional payments system.
According to the World Bank’s latest Afghanistan Welfare Monitoring Survey—also released Wednesday— despite conflict ceasing, one in two Afghans remain poor and recent gains in welfare have come at the cost of possibly exhausting all coping strategies and household resources.
Since the crash of 2021, households report an improvement in their capacity to meet basic needs, but deprivation and vulnerability remain high.
Afghan households have mobilized extra labor to make ends meet, mainly among youth and women. The overall increase in labor supply has outpaced demand, doubling unemployment.
Pr/sa
