Afghanistan Peace CampaignBy Fidel Rahmati
World Bank said Afghanistan’s economy continued to grow in 2025, but the expansion has failed to improve living conditions as poverty, inflation, and economic vulnerability continue to deepen across the country.
In its latest Afghanistan Development Update released Tuesday, the World Bank said Afghanistan’s real gross domestic product grew by 4.8 percent in 2025 despite regional tensions, border closures, and declining foreign assistance.
The report said domestic demand and the return of millions of Afghan refugees contributed to economic growth during the past year, but rapid population growth, weak investment, and structural limitations prevented most citizens from benefiting from the recovery.
According to the World Bank, the return of nearly 3.7 million refugees placed additional pressure on the economy and contributed to a 5.6 percent decline in per capita GDP.
The report also showed inflation rising sharply to 7.6 percent by March 2026, compared with an earlier average of 3.6 percent, driven largely by higher food prices, supply constraints, and increased domestic demand.
The World Bank warned that rising inflation and falling per capita income have weakened household purchasing power and intensified poverty and food insecurity across Afghanistan.
Although domestic revenues improved to 19.8 percent of GDP because of stronger tax collection, declining foreign aid continued to limit infrastructure investment and reduce the country’s ability to respond to economic shocks.
The report described Afghanistan’s external economic position as fragile, saying the current account deficit widened to 36.1 percent of GDP in 2025 because of heavy reliance on imports and weak export performance.
“Afghanistan’s economy is showing resilience in the face of significant headwinds, but growth alone is not enough,” said Faris Hadad-Zervos, World Bank Country Director for Afghanistan. “With millions of Afghans returning home, rapid population growth is outpacing economic gains – pushing down incomes and deepening poverty and fragility. Unlocking the private sector’s potential and improving access to finance are some of the essential steps to help drive job creation and, ultimately, improve people’s lives.”
The World Bank forecast economic growth could slow to around 4 percent in 2026, citing risks linked to regional instability, falling aid, rapid population growth, and broader economic shocks.
Afghanistan’s economy has remained heavily dependent on humanitarian assistance and imports since the Taliban returned to power in 2021 and international financial support sharply declined.
International organizations have repeatedly warned that restrictions on women’s education and employment, combined with unemployment and weak private sector investment, continue to limit long-term economic recovery in Afghanistan.