Afghanistan Economy

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Afghanistan is a landlocked country in South-Central Asia. Its location makes it a strategic point to connect East and West Asia or the Middle East. Afghanistan has a land area of 647,500 square kms and a population of 28,150,000, according to the 2009 estimates.
 

Afghanistan is a landlocked country in South-Central Asia. Its location makes it a strategic point to connect East and West Asia or the Middle East. Afghanistan has a land area of 647,500 square kms and a population of 28,150,000, according to the 2009 estimates.

 

The country’s natural resources include gold, copper, silver and zinc in the Southeast, precious and semi-precious stones in the Northeast and significant amount of petroleum in the North. However the natural resources have not been utilized to the fullest due to frequent invasions that country has been experiencing lately.

 

Even after the fall of the Taliban regime in 2001, it is one of the poorest countries in the world. About 40% of the country’s population lives below the poverty line. The economic progress is extremely slow with high dependency on agriculture, trade with neighboring countries and international donation. There is still a dearth of basic facilities, such as housing, clean water, medical care and electricity. Some of the major threats to the growth of Afghanistan’s economy are weak law enforcement and governance, criminality and insecurity.  

 

Rise of Afghanistan Economy

 

Since 2001, "economic growth has been strong and has generated better livelihoods" in Afghanistan, reports the World Bank. The infusion of multi-billion US dollars proved significantly beneficial to Afghanistan’s economy. Moreover, substantial agricultural production helped the country recover from the four-year draught in 1998-2001.

 

There was a 14% rise in the real value of the non-drug GDP in 2005 in the country. Cultivation of poppy and opium, morphine, heroin and other illicit drugs contributes about one-third of Afghanistan's GDP. About 3.3 million of population depends on opium production for its livelihood.

 

Development of infrastructure is in the pipeline, with two American companies, Black & Veatch and the Louis Berger Group, involved in rebuilding water supply systems, roads and power lines.

 

Another remarkable aspect in the recovery of Afghanistan’s economy is the homecoming of more than 5 million Afghan refugees, who had left the country in the wake of the social and political upheaval in the country. They came back completely rejuvenated and brought with them substantial funds and skills to re-establish their foothold in the country. This has led to the reestablishment of a market institution, giving a boost to employment. The setting up of a $25 million Coca Cola bottling plant by a Dubai-based Afghan family in 2006 has been a major factor behind the increase in employment in Afghanistan.

 

The financial sector has also experienced tremendous growth, with the opening of more than 16 banks in 2003. Some of the major banking institutions in the country are Afghanistan International Bank, Kabul Bank, Azizi Bank, Standard Chartered Bank and First Micro Finance Bank. It is now possible to transfer money in and out of the country through banking channels.

 

There are prospects for high economic growth in Afghanistan, according to the US Geological Survey and the Afghan Ministry of Mines and Industry. There are speculations about the natural resources reserves that are expected to generate enormous GDP for the country. These include:

 

  • up to 36 trillion cubic feet (1,000 km3) of natural gas

  • 3.6 billion barrels (570,000,000 m3) of petroleum

  • and up to 1,325 million barrels (2.107E+8 m3) of natural gas liquids