Estudios Económicos


Population 36.0 million
GDP 545 US$
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major macro economic indicators

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 2.7 2.7 3.0 3.5
Inflation (yearly average, %) 5.0 0.6 2.6 4.5
Budget balance (% GDP) -0.6 1.5 -0.8 -0.1
Current account balance (% GDP) 4.7 9.1 2.0 0.2
Public debt (% GDP) 7.5 6.9 7.5 7.7

(e): Estimate. (f): Forecast.


  • Financial and military support from the international community
  • Development prospects for commodities including gas, oil and minerals
  • Development of regional logistics (Lapis-Lazuli) and energy (CASA-1000, TAPI) corridors through the country


  • Unstable security and geopolitical situation
  • Poverty
  • Corruption and weak governance
  • Reliant on international aid
  • Fragile banking system and low distribution of credit
  • Heavily reliant on the agricultural sector


Military stalemate and major political uncertainties

Insurgent groups are at the height of their territorial expansion since 2001, while the central government’s territorial control has now fallen below 50%. Despite greater cohesion of the Taliban under the command of Haibatullah Akhunzada, the insurgent group has failed to take and hold a provincial capital since 2015. The conflict therefore remains at an impasse. The country’s future depends on peace talks between the United States and the Taliban, which could see US forces make a gradual withdrawal in exchange for commitments by the Taliban to prevent international Islamist groups from establishing themselves, and to enter into peace and power-sharing negotiations with the government. However, buoyed by recent military successes, the Taliban may be disinclined to negotiate. They continue to refuse dialogue with the government and could well betray their commitments to the United States in order to fight a weakened enemy, whose army is corrupt, underfunded, struggling for legitimacy and undermined by absenteeism and desertion.

The first round of the presidential elections in September 2019, the fourth set of elections since the fall of the Taliban regime, did not produce a winner, paving the way for a second round, which will pit the outgoing President, Ashraf Ghani, against Abdullah Abdullah, the head of government. The elections were marred by irregularities, protests over the results by the main opposition candidate, as well as terrorist attacks throughout the country. Institutional legitimacy is in question on two fronts: turnout was extremely low (20%), while the main opposition and candidates, outgoing President Ashraf Ghani and Abdullah Abdullah, have indicated their refusal to accept a power-sharing agreement similar to the one signed in 2014, a factor that could increase tensions between the ethnic groups they represent. The question of whether the State could collapse remains. In a worst case scenario, a situation similar to that of 1992 is conceivable, when the end of Soviet support for the government of the day caused Afghanistan to break up into fiefdoms controlled by local warlords, unleashing a four-year civil war.


An agricultural economy supported by good harvests

In 2019, Afghan growth recovered, largely due to the end of the drought experienced in 2018. The sector still accounts for 44% of employment and 25% of GDP, and its strong numbers will allow household consumption to rise. Afghanistan’s growth prospects will therefore improve in 2020, as favourable climatic conditions boost agricultural production.

The manufacturing and services sectors will continue to suffer from the uncertainties associated with the postponement of the second round to spring 2020. These uncertainties and the security issue will also sap investor confidence and limit the flow of private capital into Afghanistan. Credit to the private sector continues to decline and now stands at around 3% of GDP. Despite having surplus cash, banks prefer to hold public debt securities, with loans to the private sector representing only 15.7% of deposits. The extension of eligible collateral and the credit register should have a positive impact on bank intermediation. Despite the expansion, strong demographic growth will lead to a further increase in poverty. Inflation will continue to accelerate, due to increased demand for food products.


Total dependence on international aid to finance twin deficits

Public spending had to go up in 2019 to respond to increased military needs. Government revenues remained strong, benefiting from the 2018 tax collection reforms. However, they will not be enough to make up for the decrease in donations to the Afghan State, which represent about 50% of the budget. The adjustment will therefore be achieved through a moderate deficit in 2020 and no increase in development investment. Debt will remain low, but reduced market access makes the State vulnerable to cuts in international aid. Budgetary room for manoeuvre will remain minimal. External financing is crucial to the country’s security, with the Afghan army (50% of expenditure) 90% financed by foreign sources.

The trade balance will remain largely negative (around -35% of GDP), given the low level of exports, which are affected by the difficult situation in neighbouring Pakistan. The country’s external deficits will continue to be financed by foreign donations. While their reduction will cause the current account balance to deteriorate in 2020, foreign exchange reserves should still be kept at an acceptable level (just under a year of imports).


Last update: February 2020

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