The Asian Development Bank (ADB) forecasts that Afghanistan’s gross domestic product GDP growth will increase by 3% in 2021 and 4% in 2022 after the normalization of business activity and market sentiment.

In its Asian Development Outlook (ADO) 2021 released on Wednesday, the ADB stated that Afghanistan’s economic growth is expected to recover this year and accelerate next year after a sharp decline in 2020 from the coronavirus disease (COVID-19) pandemic and continued violence and instability.

“Afghanistan’s economy experienced unprecedented disruption in 2020 due to COVID-19 pandemic, political instability and continued violence, which cut remittances, trade, and revenue,” said ADB Country Director for Afghanistan Narendra Singru. 

“With a successful COVID-19 vaccine rollout and post-pandemic recovery, the country should be on track to achieve economic growth this year and in 2022 as business activity and market sentiment normalize,” Singru said.

According to the report, inflation more than doubled from 2.3% in 2019 to 5.6% in 2020 driven by higher food prices. Food price inflation in 2020 was estimated at 10% with the highest spike recorded in April when border closure and panic buying propelled it to 16.6%. Inflation is projected to moderate to 5.0% in 2021 and 4.0% in 2022 as food supplies improve.

However, risks remain, including implementing vaccinations in remote and insecure areas, conflict, criminality, corruption, political instability, and broader social fragility. If unaddressed, these could weigh heavily on the economy and impede recovery.

“Supporting the recovery of micro, small, and medium-sized enterprises (MSMEs) hard hit by the pandemic is pivotal to safeguarding workers’ incomes and livelihoods, according to the report. Before the pandemic, MSMEs were estimated to provide nearly 1.6 million service and industry jobs. The government approved a 2-year support package worth $295 million in October 2020 to improve business conditions and implemented countercyclical measures that include support for MSMEs,” the report read.

The ADB suggests that Afghanistan should facilitate MSME access to markets by developing infrastructure, improving security, combating corruption, simplifying regulation, strengthening property rights and contract enforcement, and promoting innovation and better labor skills in order to improve the business environment.

“Increasing access to credit and further expanding the formal bank sector is also crucial,” the organization said.

“ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region,” the report concluded.

The Ministry of Agriculture, Irrigation and Livestock (MAIL) said it will build 38 new saffron processing centers in seven provinces in the country this solar year, 1400.

The ministry says the centers will be built in Herat, Ghazni, Sar-e-Pul, Kunduz, Balkh, Faryab and Daikundi provinces.

The ministry added that the construction of these centers will help increase the yield, quality and value of saffron.

Saffron is one of the most important export products of Afghanistan.

Afghan saffron has sold for up to $1,000 per kilogram in world markets due to its high quality.

However, according to a number of growers, the price of saffron globally has dropped in the past year.

A few years ago, Afghanistan government and donors started promoting saffron as a legal alternative to the cultivation of opium poppy, as a commodity that fits with a market-led approach to Afghanistan’s agricultural sector and as a crop that can enhance women’s participation in economic activities and their productive role outside the household.

According to the Afghanistan Research and Evaluation Unit (AREU) the planting of saffron provides the basis for growth and employment creation envisaged in the country.

The Ministry of Agriculture, Irrigation and Livestock (MAIL), reports that in the 1399 solar year, 14,877 metric tons of walnuts were harvested throughout the country.

According to MAIL data, 5,206 hectares of land was used to cultivate walnut trees in 28 provinces.

Badakhshan was reported as having the highest yield with a harvest of 4,464 metric tons.
Kapisa produced 2,520 metric tons; Parwan ended the year with 1,575 metric tons; and Baghlan with 803 metric tons.

MAIL attributed the solid harvest to good weather, timely rains and the support of the Ministry of Agriculture for growers.

Kabul, Nuristan, Takhar, Panjshir, Kunar, Paktia, Maidan Wardak and Daikundi also have suitable conditions for the production and growth of walnuts, MAIL stated.

Walnuts are grown prolifically across Afghanistan especially as the mountainous and sandy areas provide perfect growing conditions. Walnuts are also popular among Afghans.

So far, several types of walnuts have been identified in the country, the most common of which is the paper-shell type walnuts.

Walnut tree wood is also used in industry, and even the flowers and bark of the kernels in the form of iodine are used in Greek medicine. The fruit or kernel is rich in vitamins A and B and is eaten fresh and dried.

Walnuts contain 76% oil, 22% protein and some carbohydrates, as well as a small amount of vitamins A-B-E in raw fruits and vitamin C, which increases its value.

Dry nuts are of paramount economic importance to Afghanistan and because dried walnuts have a high sales market value, this dried fruit plays a major role in the country’s economy.