Afghanistan’s economy has grown by an estimated 2.9 percent in 2019, driven mainly by strong agricultural growth following recovery from drought, but lingering political uncertainty dampens private confidence and investment, the World Bank reported on Wednesday.
“Growth picked up in Afghanistan in 2019. This is good news, but insecurity and political uncertainty are holding back the Afghan economy,” said Henry Kerali, World Bank Country Director for Afghanistan.
“Afghanistan needs to ramp up the pace of reforms to generate faster growth necessary to improve the living standards of its people and reduce poverty,” he said.
The report notes that as drought impacts further recede and private sector confidence improves following the anticipated conclusion of the presidential election, growth is expected to accelerate to 3.3 percent in 2020.
Over the medium-term, "growth is projected to hover around 4 percent provided that the security situation does not further deteriorate and that international aid support continues," the report said.
But despite optimistic projections other serious threats exist in the future:
"Growth prospects are subject to other significant downside risks, including further political instability, unexpected cuts in foreign aid, and adverse regional developments," the report said.
The report stated that tax revenue has increased with the GDP:
"Domestic revenue collection reached a new high of 14.5 percent of GDP in 2019, up from 13.3 percent in 2018, the World Bank reported, citing "strong revenue performance" that reflected both "progress in establishing a robust tax system and substantial one-off revenues, including transfers from the Da Afghanistan Bank."
The World Bank provides this analysis:
"The potential for much-faster growth exists but remains dependent on continued support from the international community and the Afghan government’s commitment to pushing business environment and anti-corruption reforms," the report says.
The World Bank suggests:
"To improve confidence in the short-term, the Development Update notes the need for Government to accelerate improvements in business environment and anti-corruption reforms."