The events of August 15, 2021, triggered a sharp contraction and reconfiguration of the Afghan economy and approaches to international aid. Reduced aid drove a steep decline in aggregate demand and widespread disruptions to public services. Afghanistan lost access to the international banking system and offshore foreign exchange reserves as the central bank assets were frozen. Disruption and uncertainty led to sharp declines in investment confidence, and tens of thousands of highly skilled Afghans fled the country.

Deflation pressures have eased. However, risks to economic stability, wages and investment persist, requiring urgent policy interventions to prevent long-term stagnation. The banking sector remains fragile, marked by regulatory uncertainty, rising non-performing loans, and constrained lending activity. The sector's liquidity remains a concern, reflecting the need for robust financial reforms to support economic stability.

Additionally, amid rapid population growth, per capita income has stagnated, while poverty and food insecurity remain pressing challenges, exacerbated by high unemployment and restrictions on women's economic participation.

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