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Afghanistan’s economy to contract: World Bank

Afghanistan’s economy to contract: World Bank

Jun 09, 2020 - 11:47

KABULinfo-icon (Pajhwok): Hit by the Covid-19 pandemic, Afghanistaninfo-icon’s economy could experience a contraction, as mitigation measures are likely to weigh heavily on private consumption.

In a report, the Worldinfo-icon Bank said on Monday: “Pakistaninfo-icon (-2.6% in FY 2019/20) and Afghanistan (-5.5% in 2020) are both projected to experience contractions.”

Key labour-intensive export sectors in the South Asian region, though it has recorded a lower mortality rate, are expected to contract sharply and recover only slowly.

Growth in Bangladesh (1.6% in 2019/20) and Nepal (1.8% in 2019/20) is likely to decline markedly this year due to pandemic-related disruptions, including mitigation steps and sharp falls in exports and remittance inflows.

Nepal and the Maldives would be hard hit by a drop in tourism, the report warned, saying risks to the outlook were heavily skewed to the downside.

It noted coronavirus cases had expanded rapidly in India, Pakistan, Afghanistan and Bangladesh. “Besides the human toll, there is a risk that the pandemic will trigger a long-lasting rise in poverty, especially among the low-income countries of the region.”

If supply disruptions give rise to pervasive increases in food prices, more people could face food insecurity. Protracted low oil prices and depressed economic activity could further curtail remittance flows.

“Regional financial markets have been rattled by global market turmoil, leading to equity index declines, capital outflows, and heightened investor risk aversion, despite some recent stabilization,” the report said.

GDP in the region is projected to contract by 2.7% in 2020 as pandemic mitigation measures hinder consumption and services and uncertainty about the course of the disease chill private investment.



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