Afghanistan experiencing slowest growth in 14 years: WB
While projecting a growth rate of 0.5 percent in 2016, the World Bank said in its latest report on South Asia. The growth rate is gradually expected to rise to 3.5 percent by 2018.
“The medium-term outlook points towards a slow recovery over the next three years. Growth is projected to decline to 0.5 percent in 2016, and gradually increasing to 3.5 percent by 2018.”
While the fiscal situation has stabilised, risks to financial stability over the medium-term remain pronounced as substantial donor grants are required to meet the country’s basic development needs.
The World Bank said growth and employment were yet to recover from the impact of the security and political transition in 2014. The insurgency has intensified and the security environment has markedly deteriorated.
“Delays in the appointment of key officials and slow pace of policy actions are undermining the overall efforts to improve governance and restore confidence. Risks and uncertainty are growing and negatively affect aggregate demand and investment,” the report added.
Real GDP growth has slowed from 1.3 percent in 2014 to 0.8 percent in 2015, driven by a sharp contraction in agriculture output (-5.7 percent). Other sectors including construction, wholesale and retail tradeand communication services grew, albeit much slower than historical average.
Growth in these sectors may have experienced a lagged investment effect of previously-committed infrastructure projects and modest recovery of consumer confidence, according to the report.
The bank warned the increasing number of returnees from Pakistan would exacerbate pressures on service delivery. More than 220,000 Afghans are expected to return in 2016 alone.
Given the precarious security situation, low economic and social absorption capacity and the scarcity of land and shelter, forced displacement and the return of refugees pose important humanitarian and poverty challenges.
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