Economy: Security and development challenges remain daunting, with poor security environment continuing to exert a binding constraint on confidence, investment, and growth. Economic growth reached only 0.8 percent in 2015. Adverse weather conditions reflected slow growth , which contributed to a decline in agricultural production of 5.7 percent in 2015. Available data for the first half of 2016 indicate low levels of investment into 2016, while agricultural production has been disrupted by crop diseases and pests. Growth in 2016 is therefore expected to reach only 1.2 percent, despite progress with a number of initiatives, including Afghanistan’s accession to the World Trade Organization and the opening of the Chahbahar port in Iran, which has excellent potential as an alternative trade route. Economic growth is expected to gradually pick up over coming years, from 1.8 percent in 2017 to 3.6 percent in 2019. Stronger growth in out-years is predicated on improvements in security, political stability, reform progress, and continued high levels of aid.
Consumer prices declined steadily throughout 2015, rebounding in the first half of 2016. The rebound was driven by recovery in global energy and cereal prices and by the depreciation of the Afghani against major trading currencies. The exchange rate depreciated in the first two quarters of the year by 3.8 percent and 0.3 percent respectively, followed by an appreciation of about 2 percent in the third quarter. Foreign exchange reserves declined throughout most of 2015, before increasing in the first half of 2016 to US$7.4 billion (or around 9 months of imports). This increase was largely due to the decline in imports, resulting from weakening demand.
The fiscal situation remains stable. Revenue collection performance was strong in 2015, with domestic revenues reaching 10.2 percent of GDP. This strong performance has continued into 2016, with domestic revenues collected in the first 8 months of 2016 standing at 30 percent higher than the value for the same period in the previous year. This increase is largely the result of improvements in tax administration and the introduction and implementation of new policy measures in the second and third quarters of 2015. Public spending in the first half of 2016 was 5 percent higher than in the previous year. While security costs and civilian recurrent needs increased the operating budget spending by around 9 percent in the first half of 2016, development budget expenditures have fallen due to poorer budget execution performance across most of Government institutions. A small deficit of 1.3 percent of GDP was recorded in 2015, with a balanced budget expected in 2016.
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. Since 2002, school enrollment has increased from 1 million to 8.7 million, with a girl population of 36 percent and teacher numbers at more than 185,000. In 2015 there were nearly 300,000 students in public and private institutions of higher education from a low baseline of less than 10,000 students at the end of 2001. 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. 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-5 mortality rate and infant mortality rate dropped from 257 and 165 per 1,000 live births to 55 and 45 respectively. The maternal mortality ratio is 327 per 100,000 live births, compared with 1,600 in 2002. The number of functioning health facilities in-creased from 496 in 2002 to more than 2,000 in 2012, while the proportion of facilities with female staff increased.
Despite significant improvements in the coverage and quality of health services, Afghan health indicators remain below average for low income countries, indicating the need to further lower barriers for women accessing services. Afghanistan has one of the highest levels of child malnutrition in the world, with about 40.9 percent of children under 5 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 world-wide of 3,100 kWh (based on 2012 data). Only about 30 percent of its 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 in 2015 met about 55 percent of Afghanistan’s demand, 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 NRVA (2013/14) indicates that 46 per-cent of Afghan households own a solar device and 58 percent in rural areas.
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 total installed transmission lines carrying capacity is: 326MW from Uzbekistan, 164 MW from Iran, 433 MW from Tajikistan and 77 MW from Turkmenistan.
Last Updated: Nov 02, 2016