Afghanistan’s Economic Growth to Remain Sluggish Amid Challenges: ADB

Political uncertainty and the novel coronavirus (COVID-19) pandemic are expected to weigh on Afghanistan’s economy in 2020, according to a new Asian Development Bank (ADB) report. The government needs to raise domestic revenue to reduce grant dependence and achieve self-reliance.

In its Asian Development Outlook (ADO) 2020, ADB forecasts Afghanistan’s economy to grow at 3.0% in 2020, same as last year but picking up to 4.0% in 2021 depending on the situation in the country including improved prospects for long-term political stability and security. These developments promise to raise consumer confidence and improve business by attracting higher levels of private investment. As the current forecasts are based on developments until 20 March 2020, ADB will update these figures later this year to reflect the impact of most recent developments, including the impact of the COVID-19 pandemic.

“Accelerating domestic revenue mobilization can help Afghanistan become more self-sufficient in financing public expenditure and reducing dependence on foreign assistance,” said ADB Country Director for Afghanistan Narendra Singru. “We are hopeful, with the successful political settlement and sustainable peace, a new window of opportunity will open for Afghanistan and pave the way for prosperity and socioeconomic development.”

According to the report, inflation accelerated from 0.6% in 2018 to average 2.3% in 2019 as the afghani (local currency) depreciated and food prices reversed their steep fall in 2018 to rise by 3.8% last year. Industry decelerated in 2019 from strong 7.6% growth the previous year due to the uncertainty surrounding delayed presidential elections.

4 / April 2020
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