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.
The World Bank said its second private survey finds that many firms in Afghanistan are adjusting to the new business environment but most still face daunting challenges.
Melinda Good, World Bank Country Director for Afghanistan, said that Afghanistan continues to face enormous social and economic challenges that have a heavy impact on the welfare of its people, especially women, girls, and minorities.
“The new survey confirms the resilience of Afghanistan’s private sector, which can play a key role in the economic recovery of the country and improving the lives of all Afghans,” she said. “It also shows that firms continue to suffer from impacts of political uncertainty and policy fragmentation, Afghanistan’s isolation from the international financial sector, and reductions in international assistance.”
The Islamic Emirate said that the suspension of international aid and the freezing of the Afghan Central Bank’s assets had a negative impact on the Afghan economic condition.
“We call on the international community to separate the matters of humanitarian crisis from political issues,” said Abdul Latif Nazari, deputy economy minister.
The report said “more than three-fourths of firms surveyed in Round 2 are operational, compared to two-thirds in Round 1 of the survey.” Regarding employment and women-owned businesses: “Employment remained around 50 percent lower, on average, than before August 2021, compared to 61 percent lower in Round 1 of the survey. Women-owned businesses are most affected by restrictions…”.
The report said the international banking factors have affected the situation: “Businesses continue to be negatively impacted by the loss of international banking relationships, which has disrupted international payments and limited access to bank accounts and formal banking,” and “imports are costlier due to border closures and non-availability in the local markets; domestic inputs remain a challenge, owing mainly to price inflation and the closures of suppliers’ businesses.”—Tolonews
Source: Pakistan Observer
October 20, 2022
