Publication: Afghanistan Economic Update, April 2015
Loading...
Published
2015-04
ISSN
Date
2015-05-19
Author(s)
Editor(s)
Abstract
The political and security transition continues to take a heavy toll on Afghanistan’s economy. Economic growth is estimated to have fallen further to 2 percent in 2014 from 3.7 percent in 2013 and an average of 9 percent during 2003-12. Political uncertainty combined with weak reform progress dealt a further blow in 2014 to investor and consumer confidence, already in a slump from uncertainty building since 2013. As a result, growth in the non-agricultural sectors (manufacturing, construction, and services) is estimated to have fallen further in 2014. The agricultural harvest in 2014 was strong for the third year in a row, but was up only marginally from the bumper year of 2012. Agriculture benefited from robust cereals production thanks both to well distributed, timely rainfall and an increase in irrigated area for wheat cultivation. The growth outlook for 2015 remains weak. Afghanistan faces the dual challenge of restoring confidence in its economic prospects and addressing formidable medium term development challenges. The new government articulated its development vision and a bold reform program through its paper ‘realizing self-reliance: commitments to reforms and renewed partnership’ presented at the London Conference on Afghanistan in December 2014. The paper presents the government’s plans for tackling corruption and building better governance, restoring fiscal sustainability, bolstering private sector confidence, promoting growth, and improving security and political stability. Successful implementation of this bold reform program under difficult circumstances is the major challenge facing Afghanistan.
Link to Data Set
Citation
“World Bank. 2015. Afghanistan Economic Update, April 2015. © World Bank. http://hdl.handle.net/10986/21894 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Afghanistan Development Update, April 2016(World Bank, Washington, DC, 2016-04)The withdrawal of international security forces since 2014 and continuing political uncertainties have resulted in a significant deceleration to economic growth, with fiscal pressures increasing as security threats mount. However, to a significant extent, Afghanistan has successfully managed the immediate challenges resulting from the transition. It has maintained macroeconomic stability and established the conditions for a slow recovery of the economy. Risks to the economy remain significant, and it is vital that the Government identify new sources of growth to replace the declining donor inflows over the longer-term. The medium-term outlook points towards a slow recovery over the next three years. The rate of growth is projected to reach 1.9 percent in 2016, assuming adjustments in firms and households’ behavior in the context of the deteriorating security environment. Growth is projected to gradually increase from 1.9 percent in 2016 to 3.6 percent in 2018, if the political situation stabilizes and planned reforms are successfully implemented. On the other hand, any deterioration in the security environment could weaken growth prospects, with this risk being the most significant faced by the country.Publication Indonesia Economic Quarterly FY14 : Compilation of the July 2013, October 2013, December 2013 and March 2014 Indonesia Economic Quarterly Reports(Washington, DC, 2014-06)The Indonesia Economic Quarterly (IEQ) has two main aims. First, it reports on the key developments over the past three months in Indonesia's economy, and places these in a longer term and global context. Based on these developments and on policy changes over the period, the IEQ regularly updates the outlook for Indonesia's economy and social welfare. Second, the IEQ provides a more in-depth examination of selected economic and policy issues, and analysis of Indonesia's medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia's evolving economy. Indonesia's fiscal and monetary policy settings will continue to play a key role in facilitating the adjustments now taking place and in minimizing associated risks. There are, however, trade-offs between the objectives of restraining inflation, supporting growth and adjusting the current account deficit to the tighter financing environment. Monetary policy faces the challenge of calibrating interest and exchange rates so as to guard against rising inflationary pressures as cost pressures rise (such as from the pass-through of the weaker currency or wage increases) while facilitating improvements in the external balances, and without unduly crimping economic growth and weakening public and private sector balance sheets. With the 2014 budget under discussion with Parliament, fiscal policy faces the challenge of slower revenue growth, and higher energy subsidy and nominal debt-financing costs, raising the importance of lifting further the quality of spending and of revenue mobilization. In response to the intensification of financial market pressures, and in conjunction with the monetary policy and currency market measures mentioned above, on August 23 the Government announced a policy package containing measures intended to improve the current account, safeguard purchasing power and facilitate growth, contain inflationary pressure, and maintain investment flows. Some of the reform measures involved retracting interventionist policies on trade and proposals for improving certainty in the business environment.Publication Indonesia Economic Quarterly, October 2013 : Continuing Adjustment(World Bank, Jakarta, 2013-10)The Indonesia Economic Quarterly (IEQ) has two main aims. First, it reports on the key developments over the past three months in Indonesia's economy, and places these in a longer-term and global context. Based on these developments and on policy changes over the period, the IEQ regularly updates the outlook for Indonesia's economy and social welfare. Second, the IEQ provides a more in-depth examination of selected economic and policy issues, and analysis of Indonesia's medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia's evolving economy. A key component of the reform process has been the devolution of responsibility for basic education services to local governments and schools, and improvements in local governance can thus play a vital role in raising the quality of basic education and ensuring children leave school with adequate skills. Indeed, the Indonesian Local Education Governance (ILEG) surveys, conducted in 2009 and 2012, suggest that the quality of local governance is important for improving district education performance, making it important to continue to address key governance constraints, and to better coordinate and integrate central government financing in local education planning.Publication Afghanistan Development Update, October 2015(Washington, DC, 2015-10)More frequent incidences of violence in Afghanistan, as well as delays in the elections process and cabinet formation, continued to fuel uncertainty and affected investor confidence in 2014 and the first half of 2015. Economic growth slowed to 1.3 percent in 2014, down from 3.7 percent a year earlier. Unlike in previous years, agriculture did not contribute much to growth in 2014. Production levels were high for a third year in a row but did not supersede the strong output in 2013. Growth was mainly driven by services and a slight expansion of industries where an increase in construction activities outweighed lower production in manufacturing. Private investment activities showed strong signs of slowdown in 2014, evidenced by a drop of nearly 50 percent in new firm registrations since 2012. The National Unity Government has embarked on an ambitious reform agenda to revitalize the economy, tackle corruption, and improve investment climate. However, it will take time for these reforms to have an impact, and it is yet unclear how much they will mitigate the high risks stemming from the fragile security environment. Growing trends in security and pension and wage spending over the medium term require immediate attention. Afghanistan faces significant financing shortages for both civilian and security spending. Therefore, securing continued high levels of donor financing over the coming years is of critical importance for fiscal stability in the country. The fragile security environment and financing constraints, compounded by weak governance capacity, pose serious challenges to service delivery in Afghanistan. Any setback in reform implementation would further slowdown the pace of human capital accumulation in Afghanistan and reduce future prospects of growth and poverty reduction.Publication Kenya Economic Report, June 2013, No. 8 : Time to Shift Gears--Accelerating Growth and Poverty Reduction in the New Kenya(Washington, DC, 2013-06)The report has three main messages. First, the economy is expected to achieve higher growth targets in 2013 (5.7 percent) and 2014 (6 percent) over what it achieved in 2012 (4.6 percent), as a result of the smooth election process. However, the government will need to make a concerted effort, if it wishes to approach the 10 percent annual growth rate foreseen in Vision 2030. The report's second message emphasizes on the steps that the government needs to take to create an enabling framework for significant private sector-led growth. The Government needs to continue to invest in infrastructure, to increase domestic energy production, to address the other bottlenecks that affect the cost of doing business, and to continue following sound monetary and fiscal policies. Finally, the report's third message focuses on the poverty situation in Kenya, noting progress made since 2005, when an estimated 47 percent of the population lived below the poverty line, to the present, where poverty estimates range between 34 and 42 percent, the imprecision resulting from the lack of any recent survey data. The report notes the spatial dimension of poverty, and the poor tend to live in the arid and semi-arid regions in the north and north east. It concludes with thoughts about a poverty reduction strategy, which would emphasize on job creation, enhanced productivity of smallholder farms, strengthening and expanding cash transfer programs, targeted public spending programs to provide quality education to the rural poor, and improved poverty monitoring, so that the government can rapidly see which activities have the greatest impacts on improving the lives of the poor.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Quantitative Analysis of Road Transport Agreements (QuARTA)(Washington, DC: World Bank, 2013-04-13)Road freight transport is indispensable to international economic cooperation and foreign trade. Across all continents, it is commonly used for short and medium distances and in long distance haulage when minimizing time is important. In all instances governments play a critical role in ensuring the competitive advantage of private sector operators. Countries often have many opportunities to minimize the physical or administrative barriers that increase costs, take measures to enhance the attractiveness and competitiveness of road transport, or generally nurture the integral role of international road freight transport in the global trade logistics industry. Road freight transport is critical to domestic and international trade. It is the dominant mode of transport for overland movement of trade traffic, carrying more than 80 percent of traffic in most regions. Generally, nearly all trade traffic is carried by road at some point. Therefore, the cost and quality of road transport services is of critical importance to trade competitiveness of countries and regions within countries. In fact, road transport is fundamental to modern international division of labor and supply-chain management.Publication Doing Business in 2005(World Bank, Washington, DC, 2004)2004 was a good year for doing business in most transition economies, the World Bank Group concluded in its Doing Business in 2005 survey, the second in its series tracking regulatory reforms aimed at improving the ease of doing business in the world's economies. However, the survey found that conditions for starting and running a business in poorer countries were consistently more burdensome than in richer countries. The top 5 economies on the ease of doing business were, in order: New Zealand, United States, Singapore, Hong Kong (China), and Australia. Slovakia was the leading reformer, together with Lithuania breaking into the list of the 20 economies with the best business conditions. The major impetus for reform in 2003 was competition in the enlarged European Union. Doing Business in 2004 presented indicators in 5 topics (starting a business, hiring and firing workers, enforcing contracts, getting credit and closing a business), so this report updates these measures. There are two additional sets: registering property and protecting investors. The indicators are used to analyze economic and social outcomes, such as productivity, investment, informality, corruption, unemployment, and poverty, and identify what reforms have worked, where and why.Publication World Development Report 2008(Washington, DC, 2007)The world's demand for food is expected to double within the next 50 years, while the natural resources that sustain agriculture will become increasingly scarce, degraded, and vulnerable to the effects of climate change. In many poor countries, agriculture accounts for at least 40 percent of GDP and 80 percent of employment. At the same time, about 70 percent of the world's poor live in rural areas and most depend on agriculture for their livelihoods. World Development Report 2008 seeks to assess where, when, and how agriculture can be an effective instrument for economic development, especially development that favors the poor. It examines several broad questions: How has agriculture changed in developing countries in the past 20 years? What are the important new challenges and opportunities for agriculture? Which new sources of agricultural growth can be captured cost effectively in particular in poor countries with large agricultural sectors as in Africa? How can agricultural growth be made more effective for poverty reduction? How can governments facilitate the transition of large populations out of agriculture, without simply transferring the burden of rural poverty to urban areas? How can the natural resource endowment for agriculture be protected? How can agriculture's negative environmental effects be contained? This year's report marks the 30th year the World Bank has been publishing the World Development Report.Publication Poverty, Prosperity, and Planet Report 2024(Washington, DC: World Bank, 2024-10-15)The Poverty, Prosperity, and Planet Report 2024 is the latest edition of the series formerly known as Poverty and Shared Prosperity. The report emphasizes that reducing poverty and increasing shared prosperity must be achieved in ways that do not come at unacceptably high costs to the environment. The current “polycrisis”—where the multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time—makes national development strategies and international cooperation difficult. Offering the first post-Coronavirus (COVID)-19 pandemic assessment of global progress on this interlinked agenda, the report finds that global poverty reduction has resumed but at a pace slower than before the COVID-19 crisis. Nearly 700 million people worldwide live in extreme poverty with less than US$2.15 per person per day. Progress has essentially plateaued amid lower economic growth and the impacts of COVID-19 and other crises. Today, extreme poverty is concentrated mostly in Sub-Saharan Africa and fragile settings. At a higher standard more typical of upper-middle-income countries—US$6.85 per person per day—almost one-half of the world is living in poverty. The report also provides evidence that the number of countries that have high levels of income inequality has declined considerably during the past two decades, but the pace of improvements in shared prosperity has slowed, and that inequality remains high in Latin America and the Caribbean and Sub-Saharan Africa. Worldwide, people’s incomes today would need to increase fivefold on average to reach a minimum prosperity threshold of US$25 per person per day. Where there has been progress in poverty reduction and shared prosperity, there is evidence of an increasing ability of countries to manage natural hazards, but climate risks are significantly higher in the poorest settings. Nearly one in five people globally is at risk of experiencing welfare losses due to an extreme weather event from which they will struggle to recover. The interconnected issues of climate change and poverty call for a united and inclusive effort from the global community. Development cooperation stakeholders—from governments, nongovernmental organizations, and the private sector to communities and citizens acting locally in every corner of the globe—hold pivotal roles in promoting fair and sustainable transitions. By emphasizing strategies that yield multiple benefits and diligently monitoring and addressing trade-offs, we can strive toward a future that is prosperous, equitable, and resilient.