世界发展银行-Afghanistan-Development-Update,-April-2021---Setting-Course-to-Recovery_45页_2mb

Afghanistan Development Update April 2021 Summary

Core Content

This report provides an overview of Afghanistan's economic developments and medium-term outlook in the context of the ongoing impact of the COVID-19 pandemic, political instability, and security challenges. It highlights the need for sustained international support and domestic reforms to promote recovery and long-term stability.

Main Points

Economic Context

• Afghanistan remains an undiversified economy, heavily dependent on foreign aid and with a significant illicit sector.
• The private sector is limited, with most employment in low-productivity agriculture.
• Weak institutions, insecurity, and political instability have constrained private sector development and financial inclusion.
• The illicit economy includes opium production, smuggling, and illegal mining, and accounts for a significant share of production, exports, and employment.

Recent Economic Developments

• Economic Growth: Afghanistan's economy is estimated to have contracted by 1.9% in 2020, following an average growth rate of 2.4% from 2014-2019.
• Sector Performance:
  • Agriculture: Grew by 5.3%, driven by favorable weather and limited impact of the pandemic on rural areas.
  • Industry and Services: Contracted by 4.2% and 4.8%, respectively, due to lockdowns and border closures.
• Poverty Trends:
  • National poverty rate declined from 54.5% in 2016-17 to 47.1% in 2019-20.
  • Urban Poverty: Increased to 47.6% in 2019-20, up from 41.6% in 2016-17, due to reduced incomes and job losses.
• Fiscal Challenges:
  • Domestic revenues fell from 14.1% of GDP in 2019 to 11.4% in 2020.
  • Tax revenues declined by 7.6% in 2020, and non-tax revenues dropped by 30% due to government office closures.
  • Overall fiscal deficit reached 2.3% of GDP in 2020, significantly higher than the original budgeted deficit of 0.8%.
  • Grants increased to Afs 226.2 billion (14.9% of GDP) in 2020, but are expected to decline in the future.

Outlook and Medium-Term Prospects

• Growth Expectations: Under a baseline scenario, real GDP is expected to grow by 1% in 2021, and pick up to around 3% over the medium term.
• Investment Confidence: Remained weak throughout 2020, leading to a contraction in private sector credit to 3.03% of GDP.
• Inflation: Expected to remain moderate, with a projected 3.8% increase in 2021 and an average of around 5% during 2022-2024.
• Current Account: Likely to deteriorate as grant inflows decline, but the current account surplus is expected to grow to 2.9% of GDP in 2020.
• Fiscal Deficit: Expected to rise to 3.2% of GDP in 2021 before averaging around 1% over 2022-2024.
• Fiscal Space: Shrinking due to increased security spending and growing payroll and pension costs, with development spending expected to fall to 7.6% of GDP from 9.4% in 2019.

Risks and Priorities

• Security Risks: Continued instability, potential withdrawal of international troops, and breakdown in peace talks could further slow recovery.
• Health Risks: Resurgence of COVID-19 cases and the need for new lockdown measures pose challenges.
• Weather Risks: Drought and adverse weather conditions could negatively impact agricultural production and rural livelihoods.
• Political Risks: Inadequate progress on anti-corruption and reform commitments may lead to reduced international grant support.
• Key Priorities: Sustained international support, progress on anti-corruption and reform, and restoring private sector confidence are critical for economic recovery.

Key Information

Key Messages in Charts

• Recovery from the impacts of the pandemic will be slowed by ongoing uncertainty.
• New data shows a decline in poverty since 2016, but the pandemic has harmed incomes and livelihoods.
• The pandemic exacerbated fiscal challenges and drove up inflation.
• The trade balance improved, but the current account is expected to deteriorate with declining grants.
• Despite recovery in revenues, declining grants will drive a larger fiscal deficit in 2020.
• The outlook is subject to substantial downside risks, including a deterioration in the security situation, resurgence of the pandemic, and worse-than-expected weather conditions.

Fiscal and Economic Indicators

• Real GDP Growth: -1.9% in 2020, 1% in 2021, 3% in the medium term.
• Poverty Rate: 47.1% in 2019-20, up from 54.5% in 2016-17.
• Inflation: 5.6% in 2020, expected to rise to 3.8% in 2021 and average 5% in 2022-2024.
• Current Account Surplus: 2.9% of GDP in 2020.
• Fiscal Deficit: 2.3% of GDP in 2020, expected to rise to 3.2% in 2021 and average 1% in 2022-2024.
• Government Debt: Expected to remain low, but increase to 10% of GDP by 2024.

Conclusion

Afghanistan's recovery from the economic and social impacts of the pandemic depends on continued international support and domestic reforms. The country faces significant challenges in maintaining economic growth and reducing poverty, especially in urban areas, due to weak institutions, insecurity, and limited private sector development. Sustained aid and a stable political environment are essential for restoring confidence and enabling long-term recovery.