Violence, Lowering Business Confidence Put Afghanistan's Economy At Risk: World Bank

Election-related violence, lowering business confidence and worsening drought condition has put Afghanistan's economy at risk, a latest World Bank report said on Tuesday.

WASHIGNTON, (APP - UrduPoint / Pakistan Point News - 7th Aug, 2018 ) :Election-related violence, lowering business confidence and worsening drought condition has put Afghanistan's economy at risk, a latest World Bank report said on Tuesday.

The report, Afghanistan Development Update, which is issued twice-a-year, noted that Afghanistan's economy regained momentum after absorbing the shock of the withdrawal of international troops, the associated decline in aid and deterioration in security, and the period of political instability after the 2014 elections.

Afghanistan is slated to hold parliamentary elections in October and presidential elections in early next year, but there has been growing tensions between powerful regional leaders and the government.

The country's economic growth reached 2.7 percent in 2017 from a low of 1.5 percent in 2015, and is projected to grow at 2.4 percent this year.

"However, this trend now appears to be at risk, with increasing election-related violence, declining business confidence, worsening drought conditions, and apparent slowing of economic activity," the report said.

The substantial downside risk to the projection for 2018 includes political instability around upcoming parliamentary and district council elections, and presidential and provincial council elections, scheduled for October 2018 and April 2019 respectively.

"At the current juncture, the most important priority for the government and its international partners is to maintain public confidence to support growth and job creation," said Shubham Chaudhry, the World Bank Country Director for Afghanistan, adding that more than half of Afghans now lived in poverty. "We cannot afford to see the current momentum lost." The World Bank report said that the macroeconomic policies remained appropriate in the current conditions as the fiscal deficit for 2017 was low at around 0.5 percent of the GDP, which was likely to be maintained this year.

However, Chaudhuri said, sustaining the recent recovery would require enhanced government efforts to improve the business environment and catalyze private investment and job creation while ensuring smooth election process.

"Sustaining international support is critical to overall confidence and underpins the capacity of the government to implement the reforms we all view as vital."Political tension between powerful regional leaders and the central government is distracting the government to tackle the Taliban insurgency and a growing threat from Islamic State, raising the prospects of violence during the election periods.