By Kai Pflug
Presumably, readers of this series of blog posts have an interest in Afghanistan and also in the Afghan economy. However, realistically speaking, that does not mean many of you will read through a very recent 54-page (along with 54 graphs and figures) review by the UNDP titled “Changes in Afghan Economy, Households and Cross-Cutting Sectors (August 2021 to August 2023)”. That is where your friendly blog post writer comes in – his motto is “I will read for you so you do not have to”. So, here are a few highlights from the report.
Let’s start with the first few sentences of the report, which give a good overall summary – I am therefore just quoting them as a whole:
“Two years following the power shift in August 2021, Afghanistan is at a delicate crossroad. On the one hand, there appears to have been progress in maintaining stability, improving security, anti-corruption efforts, and combating opium production and illicit trade. On the other hand, it continues to experience a multi-faceted crisis where the economy is bottoming out of a cumulative 27 percent contraction since 2020, and nearly 7 out of 10 Afghans lack access to the most basic items, opportunities and services needed for subsistence-level living conditions.”
I will to a bit more of my own work in summarizing some parts of the report after this, I promise …
Well, not quite yet, as there is another sentence early in the report which – given StayIN’s projects – is best quoted as a whole:
“Among other things, this report suggests that targeted technical engagement with the de facto economic sector entities can be crucial to making headways in reducing the humanitarian crisis and poverty and, consequently, mitigating the risks of displacement, migration, and violent extremism.”
But now …
As the paragraph quoted above already states, the overall economic situation of Afghanistan is not good. In fact, in the last two years, GDP and per capita income decreased by 27.4% and 31.2% in USD. The biggest decline was in the service sector as this sector was particularly reliant of foreign donations. The agricultural sector also suffered – Afghanistan’s agrarian output is affected climate change, as shown through recent occurrences of droughts and floods. This is significant as the relative importance of agriculture for Afghanistan’s GDP has increased.
Somewhat surprisingly given the status of the economy, the Afghan currency has recently appreciated. This helps consumers but hurts domestic industries and exports. Indeed, imports into Afghanistan have increased considerably. Exports also increased somewhat, mainly of coal and of agricultural products.
Generally speaking, economic forecasts are not very optimistic – it is possible that capita income may decline further as GDP growth may end up being lower than population growth.
However, the UN report describes some other developments as positive, stating that living conditions seem to have improved in 2023 compared to 2021 and 2022, particularly in areas such as housing and access to heating. And while food remains the biggest issue, in 2023, a smaller number of Afghans (15.2 million) were in food insecurity emergency compared to 2022 (19.7 million).
The report also remarks on seemingly smaller but interesting issues such as that of worn-out banknotes, an issue that visitors to Afghanistan will be familiar with. Every now and then, there is an article in an Afghan news source about the government burning worn-out notes, so clearly there is awareness of the issue.
Finally, one big issue highlighted several times in the report is that the government and the country are still losing technical expertise, as indicated by the reduction in the number of national technical advisor experts in the economics-related ministries. Even in the conclusion of the report, this is emphasized as a key issue for the current government and for the recovery of Afghanistan. Hopefully, this is also an area in which the StayIN activities can bring at least some improvement.
Note: All information in this post is taken from the UN report without further verification. For more details, please refer to the report directly at https://reliefweb.int/attachments/8e4cd3a2-6cd8-457d-9c7d-8abf60545ce3/tyir_0.pdf
Originally posted 2024-03-16 18:09:15.