Afghanistan’s economic growth falls behind population growth, Says World Bank

The World Bank reports Afghanistan’s economy grew by 2.5%, falling behind the population growth rate, signaling economic challenges.

The World Bank reported on Wednesday, April 23, 2025, that Afghanistan’s economy is expected to grow by just 2.5% in the fiscal year 2024-2025, a rate lower than the population growth. The report attributed this slowdown to the decline in foreign aid to Afghanistan, which has had a significant impact on the economy.

Looking ahead, the World Bank forecasts that economic growth in Afghanistan for the fiscal year 2025-2026 will average only 2.2%. The global economic uncertainty and weak growth prospects in South Asia were noted as factors contributing to the decline in Afghanistan’s economic performance.

The report also highlighted that strengthening domestic revenue collection could help improve the region’s resilience against future shocks. The World Bank recommended reforms to increase economic stability and foster job creation, which are crucial for sustained growth in Afghanistan and the surrounding region.

In addition to Afghanistan’s struggles, the broader South Asia region is also experiencing a slowdown. The World Bank predicts that regional growth will decline to 5.8% in 2025. These developments are reflective of global challenges that are affecting emerging economies worldwide.

The Bank’s Vice President for South Asia, Martin Raiser, emphasized the need for significant reforms to boost resilience and stimulate faster job creation and economic growth in the region. Without these changes, the region’s economies, particularly Afghanistan, are at risk of further stagnation.

As of February, the World Bank had already warned that Afghanistan’s economy remains fragile, hindered by financial isolation, political instability, and a shortage of skilled workers. The reduction in foreign aid and the ongoing suspension of U.S. humanitarian assistance have exacerbated the challenges.

The World Bank also warned that if foreign aid continues to decline, it could lead to further weakening of aggregate demand and increase economic pressures. Humanitarian needs are at a critical level, with over half of Afghanistan’s population requiring assistance, according to the United Nations.

The future of Afghanistan’s economy looks uncertain without substantial reforms and international support. Both immediate aid and long-term structural changes are needed to prevent a worsening of the economic crisis. If these conditions are not addressed, the potential for a humanitarian disaster in Afghanistan remains high.

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