KABUL (SW) \u2013 Afghanistan faces a sluggish economic recovery from COVID-19 amid continued political uncertainties and possible decline in international aid, said the World Bank in its latest country update.<\/p>\n
Released on Monday, \u2018Setting Course to Recovery\u2019 showed that robust agricultural growth has partially buoyed Afghanistan\u2019s economy, which shrunk by around two percent in 2020\u2014a smaller contraction than previous estimates. However, lockdowns, weak investment, and trade disruptions have hit hard services and industries, increasing hardship and unemployment in cities.<\/p>\n
Growth is expected to reach one percent in 2021 and top around three percent in 2022 as the COVID-19 crisis fades.\u00a0Per capita incomes are unlikely to recover to pre-COVID levels until 2025 due to fast population growth.<\/p>\n
\u201cThe current political and security uncertainties have created serious hurdles to Afghanistan\u2019s economic recovery from the COVID-19 crisis. A slower pace of recovery means higher unemployment, lower government revenues, and \u2013 ultimately \u2013 more difficult living conditions for Afghans,\u201d\u00a0said\u00a0Henry Kerali, World Bank Country Director for Afghanistan.<\/p>\n
A full recovery will be challenging as many firms have closed and jobs were lost.\u00a0Private sector confidence has weakened amid difficult security conditions, uncertainty about the outcome of the ongoing peace talks, the possible withdrawal of international troops, and potential sharp declines in future international aid support.<\/p>\n
Droughts are expected in 2021 and will likely reduce agricultural activity, further weakening growth prospects.<\/p>\n
The report emphasizes that a strong and sustainable partnership between the Afghan government and its international partners is key to driving recovery and restoring private sector confidence.\u00a0In that effort, the government needs to accelerate reforms to improve governance, fight corruption, mobilize revenue, and boost business.\u00a0Simultaneously, donors can support private sector confidence through clearer multi-year aid commitments and by defining measurable priority reforms that condition continued grant support.<\/p>\n
The Afghanistan Development Update is a companion piece to the South Asia Economic Focus, a twice-a-year World Bank report that examines economic developments and prospects in the South Asia region and analyzes policy challenges faced by countries.<\/p>\n
The Spring 2021 edition titled \u201cSouth Asia Vaccinates,\u201d launched on March 31, 2021, shows that economic activity in South Asia is bouncing back, but growth is uneven, recovery remains fragile, and the economic outlook is precarious. The report also focuses on the different dimensions of vaccine deployment and provides a cost-benefit analysis of vaccination in the region.<\/p>\n
ENDS<\/p>\n","protected":false},"excerpt":{"rendered":"
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