Afghanistan Economy

By liza ormol

Outline

• Economy overview

• Contribution of different sectors in

economy(agriculture , services , industry)

• foreign investment

• GDP

• Government budget

• Inflation

• Trade

Economy overview

• Since late 2001,afghanistan has become a

major site of concentration of international aid

totaling around US$286.4 billions , or US$9,426

per afghan citizen

• The economy has improved significantly since

the fall of the Taliban regime in 2001 largely

because of infusion of international assistance

•

International Aid , Security

Cont’d

• Despite the progress of past years , Afghanistan

is extremely poor , and highly dependent on

foreign aid

• Much the population still suffering from shortage

of housing , clean water , electricity and etc.

• The international community remains committed

to Afghanistan's development , pledging over

$67 billions at nine donors

Contribution of different sectors

• Agriculture:• Agriculture traditionally has been the foundation of

Afghanistan's economy , employing as much as 80% of

the workforce and contributing half of GDP

• In the early 2000s half of the arable land was

uncultivated , due to limited water supply and in begging

of 2003 agriculture output increased because of

international aid

GDP,Growth of different sectors

Cont’d

• The main legal crops are : wheat , vegetable , grapes ,

rice , corn , fruits and potato's

• The main types of livestock are cattle , sheep , and

goats; cow’s milk is the most valuable product of

livestock raising

• As of September 2009 , more than 53000 agricultural

loans ranging from approximately $200 to $2 million had

gone to small businesses

Donors Aid to Afghanistan

services

• Since 2002 the government has encouraged

recovery of a formal banking system and a set

commercial banking laws was passed in 2003

• And banks from Britain , India and Pakistan

opened their branches in Kabul

• In mid-2004 (AIB) begin operating with the

backing of the Asian development bank and

75% ownership by afghan businessmen

•

Cont’d

• The smuggling and other illegal economic

activity that were pervasive during war periods

left a very strong residual black-market

• Specializing in moving goods illegally into

Pakistan and moving illegal drugs north worth

into central Asia and ultimately Russia and

western Europe

• And government established 20 tourist sites by

2010

Industry and manufacturing

• In early 2000s, foreign investment in the industrial sector

focused on small and medium –sized enterprises ,

predominantly in telecommunications

• revival projects have concentrated on agricultural

processing and carpet enterprise

• Some small plants in Herat , Kabul and Mazar-e-Sharif

produced textiles , leather goods and processed foods

Foreign investment

• To encourage foreign investment , in 2002 the

government began allowing 100% foreign

ownership of afghan enterprise

• Offering substantial tax , benefits and unlimited

transfer of assets out of country

• The Afghanistan investment support agency was

established in 2003 to centralize foreign

investment activities

FDI by Regions

Cont’d

• Further investment sectors are : telecommunication ,

energy , agricultural and healthcare system

• In 2004 foreign direct investment totaled an estimated

US $351 million

• The largest investors are Pakistan , Iran , china, united

Arab Emirates , Central Asian countries , members of

the European union and the United States .

Gross domestic product (GDP)

• excluding illegal poppy production , for fiscal year (FY)

2004-2005 Afghanistan GDP was estimated at US$5.22

billion or US$232 per capita

• Agriculture contributed 38%

• Service contributed 38%

• Industry and mining 24%

• Following the economic stand still the late 1990s

GDP of Afghanistan

Cont’d

• GDP growth rate in early 2000s have been

very high :28.6%

• In FY 2002-2003 , 16%

• 2004-2005 , 8%

• However the starting point for such figures

are very low

GDP(PPP) of Afghanistan

Government budget

• In early 2000s , Afghanistan GDP revenue was 4% , one

of the lowest in the world

• Domestic revenue were not expected to match the

government operating cost until 2011

• Afghanistan recorded a government budget deficit of

14.40% of the country’s GDP in 2013

• Government budget in Afghanistan averaged -20.13% of

GDP from 2006 until 2013

Inflation

• Under the pro-soviet regimes of the 1980’s , inflation was

high but limited by government controls and inflation

reached 150% per year during civil wars of the early

1990s

• And it remained high under Taliban regime

• After the currency reform of 2002, inflation averaged

10% per year for the first two years and it rose to 16.3%

in 2005

• Afghanistan inflation rate recorded at 5.60% in march of

2014

Afghanistan Inflation Rate

Trade

• Afghanistan has been at the junction of trade routes

between central , south and east Asia for over 3000

years

• Major imports for domestic use include : agricultural

inputs , rice , wheat , fuel and cooking oil

• Major indigenous exports include : fruit and nuts, primary

material and timber

• Balance of trade in Afghanistan averaged -3425.34 USD

Million from 2003 until 2013

Afghanistan Trade balance