Asia Regional Integration Center

Economic growth slowed from 2.7% in 2017 to 2.2% in 2018. A devastating drought affected more than half the country, causing agricultural growth to decline from 3.8% to 2.0%. With the drought squeezing rural incomes, private consumption contracted, while business uncertainty slowed private investment. Public consumption and investment both increased slightly in 2018 on higher government expenditures. Net exports continued to dampen growth, aggravated by the re-imposition of international sanctions on neighboring Iran, one of Afghanistan’s main trade partners. GDP growth should recover to 2.5% in 2019 and 3.0% in 2020, as agricultural production normalizes, driving an expansion in industry and services.