The World Bank in a report focusing on South Asian countries, said that the people of Afghanistan are facing a significant reduction in income.
The report estimated a 16-19 percent drop in Afghanistan’s GDP.
“Afghanistan is particularly vulnerable to higher food prices, as the country has large negative trade balances in wheat and wheat products. While all countries in the region are vulnerable to fuel price increases, the impact is largest in Afghanistan and Maldives, as both are large net importers of petroleum products relative to the size of their economies,” the report said. “Over 90 percent of the population is estimated to have insufficient food consumption.”
The Ministry of Economy (MoE) said that the suspension of international aid caused the reduction in GDP.
“The Ministry of Economy is focusing on infrastructure and major economic projects and investment on small, medium and major industrial development projects and also it works on agriculture sector, farming and increase of domestic products in accordance to the needs of the market,” said Abdul Rahman Habib, a spokesman for the MoE.
The World Bank said that food inflation reached 25 percent in July in Afghanistan and that food insecurity also stems from a lack of income as on-budget aid dried up.
“The factories which could create job opportunities have been halted. This situation can surely affect food security,” said Shakir Yaqobi, an economist.
The World Bank said that Afghanistan has increased exports of coal and fruits to Pakistan since late 2021, “which has helped Afghanistan improve the trade balance, increase revenue collection and boost income, while Pakistan benefits from access to coal close to home.”
“We want the World Bank to help the people of Afghanistan and the private sector. Billions of dollars remain frozen. The fate of the funds should be clear. But if the situation keeps going like this, and our exports increase, the Afghan economy will be damaged,” said Mohammad Younus Momand, acting head of the Afghanistan Chamber of Commerce and Investment.
The report said that Afghanistan’s real GDP could contract between 16 to 19 percent in 2022, and then follow a low growth path for the next two years—with no improvement in GDP per capita owing to high population growth.