World Bank: Afghanistan’s economy shows signs of relative recovery

Afghan Voice Agency (AVA) from Kabul, the report, titled “Employment and Women: Untapped Talent, Unrealized Growth,” predicts that Afghanistan’s gross domestic product will grow by about 4.3 percent in fiscal years 2025 and 2026; growth that is mainly driven by private and government consumption.

 

However, given the projected 8.6 percent increase in the country’s population, per capita income will decline by 4 percent; an issue that will continue to keep millions of people trapped in poverty.

 

“Sustained population growth and a surplus of low-skilled labor will continue to hinder per capita income growth and make poverty reduction difficult,” the report said.

 

According to new World Bank estimates, between 15.2 million and 23.8 million Afghans – nearly one in two people – live in extreme poverty, earning less than $3 a day. This represents up to 25 percent of the region’s poorest population.

 

The report also highlights the combined impact of widespread displacement, natural disasters, and fragile governance. Since September 2023, more than 4 million Afghans have returned from Pakistan and Iran, including an estimated 2.1 million between January and July 2025, many of whom were forcibly repatriated.

 

This sudden return, coupled with limited job opportunities and reduced international aid, has put a strain on Afghanistan’s labor market and public services.

 

The World Bank also noted that an earthquake in the east of the country in August 2025 exacerbated the crisis, killing more than 2,000 people and being the deadliest earthquake since 1998. The damage was estimated at $183 million, equivalent to 1 percent of GDP, and caused widespread destruction to the livestock sector and rural homes.

 

Regionally, the World Bank projected economic growth of 2.8 percent in 2025 and 3.3 percent in 2026 in the Middle East, North Africa, Afghanistan, and Pakistan.

 

In Afghanistan, the World Bank warned that persistent fragility, sanctions, and lack of international recognition remain major obstacles to long-term economic recovery. A reduction in foreign aid in 2025 has led to the closure of hundreds of health facilities, leaving millions without access to health services and nutrition.