Asia Regional Integration Center

Real GDP fell in 2020 by an estimated 5.0%, as COVID-19 containment measures worsened the impact of persistent violence and political instability. Industry contracted by 5.0% and services by more than 9.0% as global demand for Afghan products plunged. Agriculture, however, grew by 5.0%. Higher food prices doubled inflation to 5.6% in 2020 from 2.3% in 2019. Unemployment jumped to 37.9% from a 23.9% baseline in 2019. The poverty rate worsened from 54.5% in 2017 to around 61%–72% in 2020. Higher government spending and lower revenues widened the fiscal deficit to 20.8% of GDP from 13.9% in 2019. Development grants deepened gross international reserves to $9.7 billion in 2020, covering nearly 20 months of imports. As market activity begins to normalize, growth is expected to rebound to 3.0% in 2021 and improve to 4.0% in 2022.