Afghan Economy: A Promising Prospect?
The World Bank released a report on Tuesday on Global Economic Prospects for 2013. According to the report, Afghanistan will still enjoy a high rate of growth, despite all concerns related to US-NATO drawdown and the possible shrinking of the international aid to the country. The report said that Afghanistan has emerged as the fastest-growing economy in South Asia, with double-digit rate of 11 percent in 2012. In the meantime, the report warned that, despite all these optimisms, the real GDP growth of Afghanistan may fall to 4-6 percent for next year, a sharp decrease from the average of 10 percent in past decade.
The report is a mixed signal of hope and concerns regarding Afghanistan’s economy and the rate of its growth after the foreign forces leave Afghanistan in 2014 and an inevitable decrease in international aid to Afghanistan. The report by World Bank and other reports including one by the International Monetary Fund (IMF), released months ago, suggest that Afghanistan’s economy would remain somehow stable, despite concerns that it may come to a downfall or even collapse after withdrawal of foreign countries and their aid assistance to Afghanistan. They suggest that such fears are unfounded.
The optimisms are stemmed from a satisfactory level of rainfall and good harvest. But, actually, there are some other factors which contribute to a more important share of that optimism. The international community has spent billions of dollars in Afghanistan over past decade and of course parts of that aid have been invested in infrastructure. The investments, no matter how small, have turned to a pillar for the economy as they now benefit the people and the government. In addition to that, more hopes are to the country’s mineral resources, as the government of Afghanistan struggles to develop the sector. The officials have said that Afghanistan would be able to wean off itself from foreign aid till 2024 by developing its mining sector. According to both officials and experts, Afghanistan has vast untapped resources which are considered as the main hope for development of the country in the future.
This is the positive and promising side of the story. We cannot neglect the negative side and the fact that there are huge challenges ahead for a sustainable economy in the future. As a bitter fact, Afghan economy is deeply considered as narco-economy and a large portion of that is based on revenue from drugs. This poses a serious challenge to a sustainable economy in the future as such economy is directly fuelling the insurgency and corruption. Afghanistan needs to get its economy rid off heavily relying on opium trade and curb financing the insurgency.
Despite the optimisms over the sustainability of Afghanistan’s economy, the speedy drawdown of US and other allies and the hasty process of transition pose substantial risks for the Afghan economy after 2014. No doubt that Afghanistan would face a much harder economic phase but there are enough assurances about the potentials that the country has in hand for developing its economy.