The World Bank, while providing reassurance about Afghanistan’s current economic situation, stated that in the past year, Afghanistan has seen a 9.1% reduction in the inflation rate, and the Afghan currency has stabilized by 29.3% compared to the Pakistani Rupee. The institutions responsible for monitoring Afghanistan’s economic situation at the World Bank have released a summary of key economic indicators along with addressing economic challenges faced by the country.
The World Bank reported that by mid-2022, there was a decrease in the inflation rate due to increased availability of goods in the market and a decrease in commodity prices. This downward trend began in April 2023. In July 2023, there was a 9.1% reduction in the inflation rate, primarily driven by a 12.6% decrease in the prices of food items and a 5% decrease in the prices of other commodities. In June 2023, there was also a 2.8% reduction in the inflation rate.
The report highlighted that a decrease in international demand for commodities, partly due to challenges faced by China, has helped control prices significantly, making it a crucial driver of reduced inflation. Additionally, a decrease in the exchange rate has also played a significant role in this regard, while there has been no significant reduction in the demand for goods.
The World Bank disclosed that, according to a recent survey, there has been a noticeable decrease in the demand for commodities in comparison to mid-2022. While Afghanistan has ample supplies of commodities and food items in its major markets, three-quarters of the Afghan population still faces difficulties due to high prices.
Regarding the exchange rate, the World Bank reported that from the current year until August 24, 2023, the Afghan currency has strengthened against major world currencies. It has shown a 41.2% improvement against the Iranian Rial, a 29.3% improvement against the Pakistani Rupee, a 7.3% improvement against the US Dollar, a 4.9% improvement against the Euro, and a 6% improvement against the Chinese Yuan. The Afghan currency has also remained stable against the Indian Rupee, with 1 USD equal to 83.1 Afghanis as of August 24, 2023, indicating a 3.7% increase in the Afghan currency’s value compared to August 15, 2021.
This improvement in the exchange rate at the local level was made possible through restrictions on the use of foreign currencies during transactions, increased gold shipments, and the United Nations’ shipment of US dollars. The United Nations provided Afghanistan with $1.8 billion in 2022 and $1.2 billion in 2023.
The World Bank also noted that employment opportunities have increased for both skilled and unskilled individuals since March 2023, mainly due to agricultural cultivation, increased income, and higher demand for labor during the suitable season. There has also been an increase in wages due to higher demand. According to the report, revenue has reached 76 billion Afghanis after an 8% increase in revenue in 2023 compared to 2022, falling short of the revenue target by 7 billion Afghanis. Additionally, after a 3% increase in exports compared to the previous year, revenue reached $0.91 billion, with the textile sector showing the most significant increase at 49%.
Furthermore, income has seen a significant increase compared to the previous year, with revenues totaling $4.4 billion from January to July, reflecting a 32% increase compared to 2022.