World Bank: Afghanistan’s per capita GDP falls 5.6% despite economic growth
by
The Frontier Post
KABUL (Amu tv): Afghanistan’s per capita gross domestic product (GDP) declined by 5.6 percent in 2025, even as the overall economy expanded, highlighting the widening gap between growth and living standards, according to a new World Bank report on Thursday.
The country’s total economic output grew by an estimated 4.8 percent over the same period, driven largely by private consumption and a rebound in nonagricultural activity. But that growth was overshadowed by a sharp rise in population—estimated at 11 percent in the 2025 fiscal year, largely due to returning migrants—which diluted gains and pushed incomes per person lower, the report says.
The report portrays an economy still recovering from the severe contractions of 2021–22 but struggling under the weight of overlapping crises. Inflation increased alongside demand recovery and higher trade and transport costs, particularly as border closures disrupted supply chains.
Looking ahead, the World Bank projects Afghanistan’s economy will grow by 4.0 percent in 2026, supported by stronger domestic demand, higher private investment and gradual absorption of returnees into the labor market. However, the outlook remains highly uncertain and vulnerable to external shocks, particularly regional instability.
One of the most significant risks lies in Afghanistan’s heavy dependence on trade routes through Iran, which account for around 60 percent of total trade. Any disruption—especially amid ongoing conflict in the Middle East—could slow growth and fuel inflation, even if alternative routes are partially utilized, the report says.
At the same time, the continued return of Afghan migrants from neighboring countries is placing additional strain on the economy. The report warns that a large and sudden influx of returnees could further depress per capita incomes in the short term, as the labor market struggles to absorb new workers and create sufficient employment opportunities.
Macroeconomic indicators underscore the fragility of the recovery, the report says. After growing by 1.9 percent in 2024, Afghanistan’s GDP accelerated to 4.8 percent in 2025 and is expected to moderate slightly to 4.0 percent in 2026. Yet per capita growth remained negative in 2025 and is projected to recover only modestly.
Inflation is estimated to hover in the 4 to 5 percent range, while the country’s external position remains weak, with a current account deficit of roughly -36 to -38 percent of GDP. The fiscal balance, by contrast, is near equilibrium but slightly negative.
That external imbalance is among the most striking features of the economy. A current account deficit of that scale reflects deep dependence on foreign inflows, including aid, remittances and informal transfers, to finance imports and sustain basic economic activity.