Afghan GDP Estimated to Further Contract This Year: World Bank

The World Bank released a development update on Afghanistan, in which it estimated that the real GDP is projected to contract further in 2022, with an accumulated contraction of close to 30-35 percent between 2021 and 2022.

The report highlighted the economic and humanitarian challenges of Afghanistan.

The report said the economy of the country is now readjusting, and the international community’s ongoing off-budget support for humanitarian needs and basic services is expected to mitigate some of the negative impacts of the contraction but it will still be not sufficient to bring the economy back onto a sustainable recovery path.

“While there are signs of economic stabilization and resilience of Afghan businesses, the country continues to face enormous social and economic challenges that are impacting heavily on the welfare of the Afghan people, especially women, girls, and minorities,” said Melinda Good, World Bank Country Director for Afghanistan. “Living conditions showed slight improvements in the past few months, but deprivation remains very high across the country, and persistent inflation might further erode any welfare gains,” she said.

The Ministry of Economy said that the sanctions imposed on Afghanistan have affected the country’s economy.

“Due to the freezing of Afghan assets and due to sanctions on Afghanistan, the country faced a reduction in GDP. Promoting development projects in addition to humanitarian assistance is under consideration,” said Abdul Latif Nazari, deputy Minister of Economy.

“We hope our income will be better this year because the ground is paved for it. However, our fruits have been affected, our farmers have suffered heavy financial losses, but there have been a lot of exports from our mines,” said Khanjan Alokozai, a member of the Afghanistan Chamber of Commerce and Investment (ACCI).

The World Bank’s report said that Afghanistan’s Central Bank has lost its ability to manage payment systems and conduct monetary policy due to the freezing of offshore assets and its inability to print new afghani (Afs) notes.