Economic Analysis


Population 32.9 million
GDP per capita 611 US$
Country risk assessment
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country


major macro economic indicators

  2020 2021 2022 (e) 2023 (f)
GDP growth (%) -5.0 -20.0 -30.0 0.0
Inflation (yearly average, %) 5.4 n/a n/a 30.0
Budget balance (% GDP) -20.0 -21.0 n/a 0.0
Current account balance (% GDP) -22.0 -23.0 n/a 0.0
Public debt (% GDP) 7.8 8.7 n/a 0.0

(e): Estimate (f): Forecast *Including grants


  • Potential for exploitation of commodities (including gas, oil and minerals)
  • Development of transit corridors (Lapis-Lazuli linking Afghanistan to Turkey), launch of negotiations in late 2020 to revise the transit agreement with Pakistan and conclude a preferential trade agreement
  • Development of regional energy corridors (TAPI gas pipeline, Central Asia-South Asia power line (CASA-1000), TAP power line and power line with Uzbekistan)
  • International humanitarian financial support, including through the United Nations Children's and Food programmes   


  • No longer has access to international development assistance, mostly in the form of grants, since the Taliban took power
  • The Taliban-proclaimed Emirate is Sharia-based and since 2016 has been led by Mullah Haibatullah Akhundzada, originally from Kandahar
  • Dependence on agriculture (22% of GDP, 40% of employment), vulnerable to weather conditions
  • Low credit (4% of GDP), fragile banking system (60% of loans non-performing in 2021) and dollarised (48% of loans, 61% of deposits)
  • Difficult geography (landlocked and 50% mountainous) and vulnerability to natural disasters
  • Inadequate infrastructure (energy, water, transport, health)
  • High poverty (70% of the population), against a backdrop of informal employment (90% of GDP), unemployment (40%) and food insecurity (the 2021 World Hunger Index ranks Afghanistan 103rd out of 116 countries)
  • Poor governance (corruption, restrictive regulations, weak rule of law) and authoritarianism, lack of experience in the new regime with respect to administrative and economic management
  • Ethnic fragmentation
  • Presence of the Islamist terrorist movement


Taliban back in power 

Ejected from power in 2001 by the U.S.-led coalition, as part of their fight against Islamic terrorism following the September 11 attacks, the Taliban regained control of the country in August 2021. Following the process initiated in late 2018, the United States signed the Doha Agreement with the Taliban in 2020. This agreement stipulated a U.S. commitment to withdraw its troops in exchange for the Taliban's commitment to prevent terrorist groups from operating and to open talks with the Afghan government for a permanent cease-fire. On 13 April 2021, President Joe Biden announced the withdrawal of U.S. troops by 11 September 2021. However, on 15 August, the Taliban seized Kabul and overthrew the Islamic Republic of Afghanistan as President Ashraf Ghani fled. After overseeing emergency evacuation flights of foreign nationals and Afghans who had worked for the coalition, the United States officially completed its withdrawal on 30 August, when the Taliban declared victory. However, since then, a series of bombings, including by the Islamic State Khorasan Province (ISKP), suggests that the Taliban interim government, established on 7 September, will have difficulty maintaining control and security in the face of both extremist groups and rebels. The Taliban regime has not been recognised by any state as at the end of 2021. In particular, it is accused of trampling on the rights of women, who are prevented from working, and of girls, who are deprived of schooling. The domination of the Pashtuns in the government and administration at the expense of other ethnic groups is also a grievance. This non-recognition is accompanied by the suspension of development aid, on which the country had broadly relied. One of the main consequences is the serious food crisis (60% of the population facing extreme levels of hunger according to the United Nations).


A severe economic and social crisis

Even before the Taliban took power, poor security, growing uncertainty and recurrent drought, coupled with the COVID-19 pandemic, had been undermining confidence and growth, while already high poverty and unemployment had been increasing. The abrupt halt in the flow of aid in the form of grants, including dollar banknotes (previously 40% of GDP), has led to the afghani depreciating against the dollar by 30% between the end of 2020 and the end of 2021. To address this, the government is auctioning dollars and has imposed a cap on cash withdrawals (USD 400 per family per week). The value of the currency is expected to fall further in 2022, until the economy stabilises at a much lower level of activity. Insufficient liquidity and the inaccessibility of foreign currency accounts domiciled abroad are crippling the banking system. This is compounded by soaring inflation fuelled by the depreciation of the afghani and falling imports: food and fuel prices more than doubled in 2021. Furthermore, the drought resulted in a 20% year-on-year increase in the price of wheat in 2021, a 30% increase in the price of flour and a 70% increase in the price of cooking oil. The purchasing power of Afghans is deteriorating: per capita income could fall by almost a third to around USD 350 by 2022. Many Afghans, especially in the public sector, are working for no pay (70% of teachers). Household consumption (80% of GDP) could then contract by 40%. The restriction of women's employment may inflict an additional economic loss of 3 to 5 percentage points of GDP. For their part, the Taliban launched a food-for-work programme in Kabul in October, offering wheat in exchange for work to more than 40,000 unemployed men, with the intention of gradually expanding it to other regions. Nevertheless, it is estimated that unemployment could double by 2022-23.


In the absence of a resumption of development aid, is the country heading for a sovereign default? 

The authorities intend to curb the rising budget deficit in 2022 by adopting a 10% rate of VAT, which could generate net revenues of 1.2% of GDP, as well as phasing out pandemic-related expenditures. The Taliban are generating increasing revenues (up to 60%) from poppy cultivation and opiate trafficking (6.6 billion in 2021). Finally, the country is continuing to receive international humanitarian aid, the UN requested, in early January 2022, a record amount of USD 5 billion in emergency. The World Bank released in December 2021, a humanitarian aid of USD 280 million through the special fund for the reconstruction of the country (ARTF). However, the public debt, which has been mainly external and very low, is expected to increase because of financing the deficit with debt instead of grants. In addition, although the country received USD 10 million in debt service relief from the IMF in 2021, financing this could be complicated. A sovereign debt default cannot be ruled out. The inaugural Sukuk (sharia-compliant bond) issue, scheduled for early 2022, would enable the government to tap into large domestic savings and eventually catalyse the development of a domestic debt market. The current account deficit was largely covered by large inflows of grant aid. With the suspension and freezing of foreign exchange reserves by the U.S., estimated at over USD 9 billion (15 months’ worth of imports), the country is now struggling to pay for its imports, and is being forced to reduce them. Expatriate remittances, once again authorised by the United States since 10 December 2021, are a welcome source of funding. The United States, China, Russia and Pakistan, as part of the Troika Plus, are holding talks with Taliban leaders, aware that a deterioration would have repercussions on neighbouring countries and beyond (terrorism, drug trafficking, population exodus). 


Last updated: February 2022

  • Slovak
  • English