Economy: Violence continues to affect the security of livelihoods and economic activity in the country. Civilian casualties increased by around 3 percent in 2016 over the previous year, reaching unprecedented levels. Business sentiment remains suppressed, with the number of new firm registrations being about the same level as in the previous year. Other proxy indicators, such as vehicle registration, do not indicate a strong pick-up in economic activity in the first three quarters of the year. The agriculture sector’s performance has also been mixed in 2016; cereals production recorded a decline of nearly 5 percent while fruit production has been higher.
Real gross domestic product (GDP) growth is thus projected to have only marginally increased from 0.8 percent in 2015 to 1.2 percent in 2016. With a population growth of nearly 3 percent, such a level of economic growth implies a decline in per capita income.
Inflation increased from -1.5 percent in 2015 to 4.4 percent in 2016, driven by lagged effects of currency depreciation and a recovery in global food prices. As most consumer goods in Afghanistan are imported, global prices and exchange rate movements tend to heavily drive domestic prices.
Revenue collection has significantly improved in the past two years after the abrupt decline in revenues in 2014. Domestic revenues increased by nearly 15 percent in 2016, which exceeded the revenue target by around 5 percent. Both tax and non-tax revenues increased, while customs duties remained flat given weak imports. In proportion to GDP, however, revenue collection still remains relatively low at 10.7 percent.
With an increase in exports and slower growth for imports (due to weaker domestic demand), the trade deficit is estimated to have improved from -36.7 percent of GDP in 2015 to -35.0 percent in 2016. The large trade deficit continues to be financed by foreign aid, with the current account balance expected in a small surplus estimated at around 4 percent of GDP in 2016.
Growth is expected to increase to 2.4 percent in 2017 and to reach 3.1 percent by 2019, predicated on political stability and absence of further deterioration in the security environment. With agriculture production projected at around the historical average in 2017, food prices are expected to remain moderate and consumer price index (CPI) inflation is forecast to reach 5.5 percent.
Education: In 2001, no girls attended formal schools and boys’ enrollment was about 1 million. However, education is now one of Afghanistan’s success stories. In 2001, net enrollment was estimated at 43 percent for boys and a dismal 3 percent for girls. There were only about 21,000 teachers (largely under-educated) for a school-age population estimated at more than 5 million — or about 240 students for every trained teacher. School enrollment has increased from 1 million in 2002 to around 8.7 million for general education in 2016, with a girl population of 39 percent and teacher numbers at more than 185,000.
In 2016 there were nearly 310,000 students (30 percent female) in public and private institutions of higher education from a low baseline of less than 10,000 students at the end of 2001. The majority of the teacher force has received training either through Teacher Training Centers or In-service Teacher Training. Efforts are ongoing to continuously upgrade teacher qualifications and overall access to equitable and quality education in Afghanistan.
However, only about half of the total registered schools have proper buildings, while the rest operate in tents, houses and under trees. Only 55 percent of the teachers meet the minimum requirements while the rest get in-service training to upgrade their skills. National student learning assessments are yet to be mainstreamed and the quality of education and administration re-mains relatively weak.
Health: The Afghan health system has made considerable progress during the past decade thanks to strong government leadership, sound public health policies, innovative service delivery, careful program monitoring and evaluation, and development assistance. Data from household surveys (between 2003 and 2015) show significant declines in maternal and child mortality.
The under-five mortality rate and infant mortality rate dropped from 257 and 165 per 1,000 live births to 55 and 45, respectively. The number of functioning health facilities increased from 496 in 2002 to more than 2,400 in 2016, while the proportion of facilities with female staff increased. Births attended by skilled health personnel among the lowest income quintile increased to 50 percent from 15.6 percent. PENTA3 immunization coverage (a combination of five vaccines in one covering diphtheria, Pertussis, tetanus, haemophilus influenzae type b, and hepatitis B) more than doubled, from 29 percent to 72 percent, among children aged 12 to 23 months in the lowest income quintile. Contraceptive prevalence rate (using any modern method) increased to 30 percent from 19.5 percent.
Despite significant improvements in the coverage and quality of health services, Afghan health indicators remain below average for low income countries, indicating the need for further action to overcome barriers for women accessing services. Afghanistan has one of the highest levels of child malnutrition in the world, with 40.9 percent of children under five suffering from chronic malnutrition, while both women and children suffer from high levels of vitamin and mineral deficiencies.
Access to Electricity: Despite significant progress in developing the electricity grid, Afghanistan retains one of the lowest rates of access and usage of electricity in the world. Per capita consumption averages 154 kWh per capita per year, which is significantly less than the South Asia average of 667 kWh per year and the average electricity usage per person worldwide of 3,100 kWh (based on 2012 data).
Only about 30 percent of Afghanistan’s population is connected to the grid, up from 6 percent in 2002. Afghanistan’s power utility, DABS, has grown its customer base steadily, increasing by an additional 6 percent every year. In 2015, Afghanistan’s peak demand was 1,500 MW and overall consumption was about 5,000 GWh. Afghanistan benefits from cheap imported power that met about 55 percent of Afghanistan’s demand in 2015, with the remainder supplied from domestic hydropower and thermal plants.
The reliability of the grid, particularly in Kabul, has improved significantly over the past few years. Nevertheless, load shedding and outages are still sufficiently common that few have given up their private generators. A large part of the population also owns small solar devices, such as solar lanterns, mainly for lighting and cell phone charging. The National Risk and Vulnerability Assessment (NRVA), 2013-2014, indicates that 46 percent of all Afghan households own a solar device, with the proportion higher in rural areas at 58 percent.
Low connectivity to the grid conceals a vast difference between rural and urban access. While over 89 percent of the population in large urban areas like Kabul, Kandahar, Herat, and Mazar-e-Sharif have access to grid electricity, less than 11 percent of the rural population has access to grid-connected power. About 77 percent of the Afghan population lives in rural areas. Large parts of Kabul, Mazar-e-Sharif, and Pul-e-Khumri have 24-hour power supply. These cities are part of the North East Power System (NEPS), which imports up to 300 MW from Uzbekistan throughout the year, supplemented by up to 300 MW from Tajikistan during the summer. Currently, the carrying capacity of total installed transmission lines is 326MW from Uzbekistan, 164 MW from Iran, 433 MW from Tajikistan, and 77 MW from Turkmenistan.
Last Updated: Apr 11, 2017