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Afghanistan’s economy shows modest growth but recovery remains fragile

The Afghan economy is showing signs of moderate growth, but still faces significant challenges, including fiscal constraints, trade imbalances, and a limited capacity for public investment, the World Bank (WB) said Wednesday.
According to the organization’s latest Afghanistan Development Update, issued on Wednesday, “Afghanistan’s economic recovery remains uncertain”.
Modest GDP growth of 2.7%, driven by private consumption, has recouped only about 10% of past economic losses, indicative of the slow and fragile nature of the recovery, the WB said.
According to the organization, this level of growth has done little to address deeper structural issues and significant vulnerabilities within Afghanistan’s economy.
“Enabling women’s participation in the economy, strengthening domestic resource mobilization, maintaining price stability, and addressing critical deficits in human capital – particularly in education and healthcare, and especially for women – will be essential for long-term recovery and reducing vulnerability to future shocks,” the WB said in a statement.
Faris Hadad-Zervos, World Bank Country Director for Afghanistan said: “Afghanistan’s long-term growth prospects depend on tapping into the substantial potential of the domestic private sector and improving the overall business environment.
“Key to this is increased investment, providing access to finance to small businesses, and supporting educated and skilled women entrepreneurs so their businesses can thrive. Without this, the country risks prolonged stagnation with limited prospects for sustainable development,” he said.
Meanwhile, the partial recovery, coupled with falling food prices, has contributed to a gradual improvement in household welfare.
But most Afghan households continue to struggle to meet basic needs and poverty remains widespread.
“Vulnerable groups, including women, children, and displaced populations, continue to bear the brunt of the economic hardship, due to the lack of social protection mechanisms,” the WB stated.
In addition, Afghanistan’s trade dynamics remain a significant challenge.
In 2023-24, the country’s exports remained stable, but imports surged, leading to a widening trade deficit, the WB reported.
The appreciation of the afghani (AFN) made imports cheaper, fueling demand for foreign goods, while domestic industrial activity revived, increasing the need for imported inputs.
However, the trade deficit, exacerbated by Afghanistan’s reliance on imports for essential goods like fuel, food, and machinery, might pose a risk to the country’s economic stability, the organization stated.
Meanwhile, Deputy Minister of Economy Abdul Latif Nazari said that Afghanistan’s economy has a clear outlook and the current problems are caused by sanctions and the freezing of the country’s foreign exchange reserves.
“Afghanistan’s economic outlook is bright and hopeful. Some of the economic problems that exist are due to sanctions, banking restrictions and the freezing of assets of the Afghan people,” Nazari added.
“Our effort is to free the property of the people of Afghanistan as soon as possible and use it in line with the economic growth and development of the country.”
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Afghan delegation to participate in Iran’s international expo

Iranian officials have announced that a 200-member delegation, comprising Afghan government officials and private sector representatives, will attend the 7th International Exhibition of Iran’s Export Capabilities.
Officials from the Islamic Emirate, meanwhile, consider the presence of Afghan traders at this exhibition to be significant, stating that showcasing domestic products will help promote and market Afghan goods.
Abdul Latif Nazari, Deputy Minister of Economy, said: “Economic cooperation between the private and public sectors of Afghanistan and Iran is in the interest of both countries.”
“The visit of the high-ranking delegation of the Islamic Emirate to Iran can play a vital role in expanding economic and trade exchanges between the two countries,” he added.
In addition, Afghanistan Chamber of Commerce and Investment (ACCI) said that 80 booths have been allocated to Afghan traders at the exhibition, where agricultural products, precious stones, and other Afghan goods will be showcased.
Several experts also stated that Afghanistan’s participation in regional and international exhibitions is important and can lead to stronger economic ties with other countries.
This comes as Iran remains one of Afghanistan’s key economic partners, with annual trade volume between the two nations exceeding $3 billion.
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14 kms of TAPI pipeline laid inside Afghanistan, says project manager

Baganch Abdullayev, the General Director of the TAPI project in Afghanistan, on Thursday met with Noor Ahmad Islamjar, the governor of Herat, for a report back on progress made in accelerating the pipeline-laying process of the Turkmenistan-Afghanistan-Pakistan-India project in the province.
The Herat governor’s press office said in a statement that Abdullayev shared a brief report on the progress of the TAPI project with Islamjar.
According to the statement, Abdullayev said so far 14 kms of pipeline has been laid while an additional 24 kms of ground has been levelled for the pipeline.
During the meeting, the governor of Herat also welcomed the efforts of TAPI project officials in advancing the work and assured the project head of the local administration’s full support in facilitating the swift progress of the project.
Once completed, TAPI pipeline will transport natural gas from the Galkynysh Gas Field in Turkmenistan through Afghanistan into Pakistan and then to India.
The pipeline was completed on the Turkmenistan side in 2024, and the project is currently expanding southbound in Herat Province of Afghanistan.
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WFP appeals for $25 million to help support Afghan returnees amid humanitarian crisis

The World Food Programme (WFP) this week issued an urgent appeal for $25 million to address the escalating needs of Afghan refugees being expelled from Pakistan.
According to the WFP, thousands of Afghan families are crossing into Afghanistan from Pakistan every day and face serious food insecurity.
The organization also stated that millions in Afghanistan are grappling with severe hunger, and immediate aid of $25 million is needed to assist returnees.
On Wednesday, April 23, in a video shared on X, WFP’s head in Afghanistan, Mutinta Chimuka, visited the Torkham border crossing with Pakistan. During her visit, she highlighted the challenges faced by returnees, many of whom have spent their entire lives in Pakistan and are unfamiliar with Afghanistan.
Chimuka pointed out that many returnees have no income, employment, food, or shelter.
The WFP stressed that thousands of families are being forced to leave Pakistan, while 15 million people in Afghanistan are uncertain where their next meal will come from. The situation has become dire, with basic needs going unmet for a large portion of the population, the WFP said.
Chimuka warned that current aid efforts are insufficient to support the returnees, and new financial resources are urgently needed to address their needs by the end of the year.
Meanwhile, the pace of deportations and expulsions of Afghan migrants from neighboring countries, particularly Pakistan, continues to increase. The Pakistani Ministry of Interior reported that over 100,000 Afghan migrants have been returned since April 1.
The International Committee of the Red Cross (ICRC) has also raised alarm, noting that while thousands of refugees return every week, there are millions of Afghans who are currently facing poverty, homelessness, and difficult living conditions.
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