Kabul – Afghanistan’s nominal GDP is likely to contract by 20 percent within a year, from US$20 billion in 2020 to a figure of US$16 billion, according to a new socio-economic report by the United Nations Development Programme (UNDP). The report warns that this decline may reach 30 percent in following years, or US$14 billion, if urgent corrective action is not taken.
Already the poorest country in Asia, Afghanistan’s economic base has long been too small to support its population of 40 million. Annual per capita income had declined from US$650 in 2012 to US$500 in 2020, and is expected to drop precipitously to US$350 next year. “This new socio-economic assessment on Afghanistan estimates that restricting women from working could result in an immediate economic loss of up to US$1 billion – or up to five percent of the country’s GDP,” said UNDP Administrator Achim Steiner. “Not only is this a loss the country can ill afford but we call on the de facto authorities to uphold the rights of women and girls, including the right to learn and to work.”
Failing to invest in half of the country’s human capital – in girls’ education – will have dire socio-economic consequences for years to come.
The “Afghanistan: Socio-Economic Outlook 2021-2022” report released today calls for all available local resources to be mobilized, including female aid workers whose deployment is severely restricted in most provinces.
The economic modeling undertaken jointly by UNDP and independent economists indicates that with falling incomes and a growing population, it could take US$2 billion just to lift the incomes of all people in extreme poverty up to the poverty line.
An economic rapid appraisal released by UNDP in September projected that up to 97 percent of the population may be at risk of sinking below the poverty line by next year, unless a response to the country’s political and economic crises is urgently launched.
“We are facing the unfathomable prospect that the most basic human needs of nearly 40 million people will not be met,” said UNDP Resident Representative in Afghanistan Abdallah al Dardari. “It will require up to US$8 billion in international aid every year to fund basic services and support economic growth. We need to be strategic with how we use any available resources.”
UNDP recently published a situation report on the state of the banking and financial systems in Afghanistan which called for a “prompt and decisive action,” and warned that with delays in decision-making the cost of a banking system collapse is expected to increase.
“We need the formal banking system to be fully operational, to continue and scale support to the people in need,” said UN Assistant Secretary-General and UNDP Director for Asia and the Pacific Kanni Wignaraja. “Lifesaving and livelihood-saving projects are running, but for a local economy to kick into gear, it needs a functioning financial system that goes beyond the delivery of aid, to enabling local economic activity.”
The new UN initiative designed to respond to the unprecedented humanitarian and basic human needs catastrophe is called ‘ABADEI,’ which connotes community resilience. The initiative will see eleven UN agencies, including UNDP, and non-governmental organizations supporting community-level solutions to complement ongoing humanitarian interventions. ABADEI activities, such as cash-for-work and cash-for-business, has already created jobs for over 2,300 people with these incomes supporting vulnerable households in Mazar, Kunduz and Herat. These emergency employment schemes are rapidly expanding to support basic human needs in Badghis, Farah and other provinces as well.