Political, Security Uncertainty Adversely Affect Afghanistan’s Economic Recovery: World Bank

Political, Security Uncertainty Adversely Affect Afghanistan’s Economic Recovery: World Bank

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5 Apr 2021

Kabul: World Bank (WB) in its report, Setting Course to Recovery, stated that growth in Afghanistan is likely to reach one percent in 2021 and touch three percent in 2022 as the COVID-19 crisis resolves. However, per capita incomes are unlikely to recover to pre-COVID levels until 2025 due to fast population growth, said the WB report released on Monday.

“The present political and security uncertainties have created major hurdles to Afghanistan’s economic recovery from the COVID-19 crisis. A slower pace of recovery means higher unemployment, lower government revenues, and – ultimately – more difficult living conditions for Afghans,” said Henry Kerali, World Bank Country Director for Afghanistan.

Good agricultural growth has slightly helped grow Afghanistan’s economy, which had reduced by around two percent in 2020—a smaller contraction than previous estimates. However, lockdowns, weak investment, and trade disruptions have adversely affected services and industries, increasing hardship and unemployment in cities, World Bank said.

With loss of confidence in the private sector due to closure of firms and job losses coupled with uncertain security conditions like ongoing peace talks, possible withdrawal of international troops, and potential sharp declines in future international aid support, recovery looks feeble for the country as per the report. Droughts are expected in 2021 and will likely reduce agricultural activity, further weakening growth prospects, the bank said.

A good, long-term partnership between the Afghan government and its international partners is key to driving recovery and restoring private sector confidence added the bank. The report stated that the government has to start reforms to improve governance, reduce corruption, and boost business. Moreover, donors provide multi-year aids to boost morale of private sector, World Bank said.

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