The reports from different national and international
organizations in Afghanistan indicates that,
Political uncertainties, security challenges alongside with
withdrawal of international security
forces since 2014 have resulted in a significant slowing
down to economic growth of the country.
The real GDP declined from 1.3 Percent to 0.8 percent in
2015, however, it was projected to 1.5
percent growth in 2015, and 1.2 percent in 2016. This is
dramatically lower than the average of 9
percent recorded between 2003 and 2012 (World Bank, 2016).
Agriculture
Afghanistan’s primary sector plays a major role in the
country’s economy, about 31% of the
country’s GDP comes from agriculture. Some of the major
crops cultivated in Afghanistan are
opium, wheat, fruits and nuts, while wool, mutton,
sheepskins and lambskins also form a major
part of the produce. In 2015, the deceleration in GDP growth
was primarily driven by the decline
of the agriculture sector. Over the year, agricultural
output fell by 5.7 percent, primarily as a result
of the drop in cereals production (–14.2 percent). The
production of both rain-fed and irrigated
wheat, which account for almost 80 percent of Afghanistan’s
entire output of cereals, fell, mainly
due to low rainfall. By contrast, the fruit output increased
by around 7 percent. In 2016, the
production of cereals is projected to decline by an
additional 2.1 percent, with the per hectare yield
of wheat falling by 8 percent due to crop diseases and
pests. Total agricultural output is projected
to decline by 0.5 percent in 2016, with some of the decline
in cereals production being offset by
an increase in fruit production.
Services
The revenues primarily come from the transport, retail and
telecommunications sectors. As of
2004, approximately 10% of the Afghan population earned its
livelihood from the services sector
of the country. Banking services are offered by Afghanistan
International Bank, Standard
Chartered Bank, Kabul Bank, Azizi Bank and First Micro
Finance Bank. Since 2002 the
government has encouraged recovery of a formal banking
system and a set commercial banking
laws was passed in 2003 and banks from Britain, India and
Pakistan opened their branches in
Kabul. In mid-2004 (AIB) begin operating with the backing of
the Asian development bank and
75% ownership by afghan businessmen The smuggling and other
illegal economic activity that
were pervasive during war periods left a very strong
residual black-market. The growth rate for
services declined from 2.2 percent in 2014 to 1.6 percent in
2015. After contracting in 2014, the
rates for transportation and wholesale and retail trade
recovered in 2015, growing by 0.3 percent
and 2.8 percent respectively. However, these rates are still
well below historical averages (see
Table 1). Other services sectors, including financial
services (banking), government services, real
estate activities and ownership of dwellings, continued to
contract significantly over the year,
offsetting most of growth generated in retail trade,
communications and transport
Industry
The industrial sector expanded over the year, with growth
increasing from 2.4 percent in 2014 to
4.1 percent in 2015. This increase was driven by the strong
growth in construction activities (7.9
percent) in both the public and private sectors. While
public infrastructure investments have been
sustained throughout the years, private construction growth
may have been driven by the ongoing
implementation of projects contracted during boom years.
Manufacturing, which mostly consists
of food processing and carpet production, recovered slightly
after contracting last year, growing
by a modest 0.7 percent. Without any large mining projects
and without a pick-up in small-scale
mining activities, the mining sector contracted for the
second consecutive year. Afghanistan’s only
large mining project so far is in the Amu Darya oil basin
which started its operations in 2013.
However, this project has suffered a number of interruptions
since it was first implemented.
Afghanistan’s industrial sector survives on the small-scale
production of textiles, woven carpets
and fertilizer. Around 10% of the country’s population is
engaged in this sector. The industrial
sector contributes 26% of the revenues for the GDP of the
country. The value-added processing of
minerals and agricultural products is heavily relied upon by
a considerable portion of the Afghan
population. Some other products that substantially
contribute to the manufacturing sector of the
country are dried fruits, timber, leather, natural gas,
coal, copper, cement, semi-precious minerals,
soap, furniture, shoes, granite and marble. Afghanistan is
keen on setting up a low-cost, laborintensive
manufacturing sector, as has been done in India and China,
to decrease the level of
unemployment. In early 2000s, foreign investment in the
industrial sector focused on small and
medium –sized enterprises, predominantly in
telecommunications revival projects have
concentrated on agricultural processing and carpet
enterprise To encourage foreign investment, in
2002 the government began allowing 100% foreign ownership of
afghan enterprise Offering
substantial tax, benefits and unlimited transfer of assets
out of country.
The Afghanistan investment support agency (AISA) was
established in 2003 to centralize foreign
investment activities Further investment sectors are: telecommunication,
energy, agricultural and
healthcare system. The largest FDI largest investors are
Pakistan, Iran, china, United Arab
Emirates, Central Asian countries, members of the European
union and the United States.
Since Afghanistan has been the junction of trade routes
between central and south and east Asia
for long years, this geographically location provides the
country with a good opportunity for trade
purpose, however lack of infrastructure caused the country
to be less effective on this.
Import
Major imports for domestic use include: agricultural inputs,
rice, wheat, fuel, and cooking oil and
amount estimated to $7.63 billion. Official statistics show
that the total value of imports stood at
US$ 3.3 billion in the first half of 2016, a decline of
around 10 percent relative to the same period
in the previous year. The decline in imports is probably the
result of weakening domestic demand
and the currency depreciation, which has increased the costs
of imported goods. Iran now surpasses
Pakistan as the largest exporter of products to Afghanistan,
with nearly one fifth of Afghanistan’s
imports originating from Iran in 2015. The trade deficit
stands at nearly 40 percent of GDP, with
this deficit financed by foreign aid and remittances.
Export
In the first half of 2016, exports increased by around 6
percent compared to the same period last
year, with the total value of official exports standing at
around US$ 250 million.
In 2015 Afghanistan exported $ 865M, and during the last 5
years the export of Afghanistan have
increased at an annual rate of 8.4 percent, from $ 555M in
2010 to $ 865M in 2015. Major exports
including; fruit and nuts, primary material and timber. The
top export destination of Afghanistan
are Pakistan, India, Iran, Turkey, and the United Arab
Emirates.
Trade Balance
As of 2015 Afghanistan had a negative trade balance of
$6.76B in net imports. As compared to
their trade balance in 1995 when they still had a negative
trade balance of $196M in net imports.
the following figure provides a information on different
economic indicators from 2013 - 2019.
Reference
o The World Bank (2016). Afghanistan Development Update.
Retrieved May 6, 2017 from
https://openknowledge.worldbank.org/handle/10986/25350
o
