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Gulbanu Mukhamejanova. Socio-economic situation in Afghanistan: status, problems, prospects

The socio-economic situation in Afghanistan is of great concern to the international community. The large-scale Afghan conflict, along with political instability, negatively impacts the country’s socio-economic development: the macroeconomic situation is attributable to unsustainable growth; the main economic and social indicators are at a critical level.

 

Macroeconomic indicators

The real GDP of Afghanistan was 2% in 2016. According to the World Bank estimates, in 2017, Afghanistan’s GDP growth will be 2.6%, and 3.4% in 2018. Afghanistan’s indicators are twice and three times lower than the 8 countries included in the report on the economic prospects of South Asia [1].

The IMF forecasts real GDP growth of 3% for 2017/2018, which is the highest rate since 2014. The report also contains data on selected economic indicators: in 2017/2018 IMF forecasts a reduction in public debt (from 7.8% to 6.9% per annum) and total external debt (6.4%), a reduction in reserves and broad money supply (to 9.1% and 8.5%, respectively) and an increase in the negative trade balance (- $ 5.533 million in 2017 and – $ 5.802 million in 2018) [2].

With an annual population growth of 3%, the anticipated growth in Afghanistan’s economy so far remains well below the growth rates needed to raise living standards and create sufficient jobs for the new 400,000 job seekers. It should be noted in this regard that in 2003-2012 the average annual growth of the economy was 9.4%, mainly due to investments in infrastructure and support from international donors [3].

The inflation rate in Afghanistan is 4.4%; consumer price index (CPI) will be 5.5% in 2017, which in turn will be promoted by the growth of agricultural production [4]. The growth of domestic prices is driven by world food prices and exchange rates. Thus, the growth of the trade deficit and depreciation of the currency will seriously affect economic growth and stability.

The labor market in Afghanistan is characterized by a low labor force participation rate. The share of the employed population is 43.4%. 16.8% of the population work in the industrial sector, 43.8% are employed in the leading sector of the economy ? agriculture [5].

According to the latest data, 19.4% of the population are considered unemployed; young people (46%) and the female half of the population (36.4%) constitute the most vulnerable social groups [6]. 34.3% do not have the opportunity to find acceptable job corresponding to qualifications, the percentage of underemployed is 14.9%. The unemployment rate among men increased more than 3-fold ? from 4% to 13.9%. The highest unemployment rate was recorded in rural areas, where it reached 13.7%. 72% of the 500,000 unemployed young men live in rural areas and do not have primary education. 54% of unemployed male youth have secondary or higher education, while the opposite situation is observed in rural areas: 54% of unemployed men do not have primary education, 37.1% are illiterate [7].

The economy of Afghanistan continues to depend on international donors. Following the Brussels and Warsaw conferences, Afghanistan will receive grants of $ 3.8 billion and $ 4.5 billion respectively until 2020 [8]. On June 13, 2017, the World Bank announced the financing of 6 grants worth $ 520 million [9]. All these grants are aimed at the reconstruction and development of the country, ensuring security and eradicating poverty.

UNICEF requests $ 30.5 million to meet the humanitarian needs of children in the country as part of an inter-agency action plan for humanitarian assistance in Afghanistan in 2017. Without additional funding, UNICEF will not be able to provide critical services [10]. In its turn, OCHA (Office for the Coordination of Humanitarian Affairs) reports a shortfall of $ 400.6 million to fully implement the Humanitarian Response Plan for Afghanistan [11].

 

Healthcare

Anti-government forces continue to carry out numerous attacks. The UN Assistance Mission in Afghanistan (UNAMA) reports a record number of civilian casualties in 2016: 11,418 people (3,498 deaths and 7,920 injuries). Almost 1/3 of the victims were children (3,512 people), which is 24% more than in the same period in 2015 [12]. In the first quarter of 2017, the number of civilian casualties reached 2,200 [13].

The ongoing conflicts negatively affect the health status. As a result of the conflicts, 41 medical facilities were closed in the provinces of Nangarhar, Helmand, Uruzgan and Kandahar, thus depriving 500,000 people of access to medical services. About 6.5 million people are extremely vulnerable to infections and diseases, more than 6.25 million (20%) of the population are in need of basic health services, including 3 million women and 1 million children. At present, medical institutions cover only 60% of the population. Nevertheless, in general, their number is increasing: if in 2002 the number of medical institutions did not exceed 496, in 2016 their number was 2,400 [14].

The World Bank cites data on a significant reduction in child and infant mortality. The mortality rate among children under 5 declined from 257/1000 to 55/1000, the infant mortality rate is 45/1000 [15]. Nevertheless, Afghanistan remains one of the countries with the highest rates of infant mortality.

According to the joint UNICEF-WHO report WaSH indicators (Water, sanitation and hygiene) are among the poorest in Afghanistan. 68% of Afghans do not have access to improved sanitation, 45% use unimproved water sources [16].

 

Internal migration

An increase in the level of violence led to a rise in internal migration, mainly from rural to urban areas.

Since January 2017, the number of people forced to leave their homes in conflict areas has reached more than 100 thousand people. According to the UNOCHA, as of June 18, 2017, 138 thousand people were displaced [17]. The total number of internally displaced persons (IDPs) has reached 1.2 million since August 2016 [18]. Displacement took place in 29 of the 34 provinces. The largest number of displacements (40%) occurs in the northeastern (Kunduz, Baghlan) and southern provinces (Kandahar, Uruzgan). Experts explain this by the fact that the Taliban movement is active in these areas [19].

According to the UN forecasts, the number of IDPs will reach 450 thousand people in 2017, which is 33.3% less compared to 2016. This is due to the fact that the clashes take place in the same areas where the majority of the population has already left [20].

 

External migration

Iran and Pakistan remain two major states, accounting for more than 95% of Afghan refugees. Presumably, 1.5-2 million Afghans reside in Iran and about 1 million in Pakistan. Since July 2016, the number of returning migrants from Pakistan has risen sharply. In 2016 their total number was 117 thousand people [21].

In 2017, more than 223,000 unregistered refugees returned to Afghanistan. Since January 2017, the total number of refugees from Pakistan has reached 68,723, refugees from Iran ? 154,759 [22]. At the moment, there are about 1 million registered migrants in Pakistan and about 600,000 people without registration [23].

International agencies expect the continuation of this trend, and suggest that by the end of 2017, about 600,000 unregistered Afghan refugees will return to the country, including 220,000 repatriates from Pakistan. It is expected that in cities with a high concentration of returnees (Kabul, Nangarhar), as well as in areas with IDPs, health facilities will be overloaded [24]. The World Bank expects a deterioration of the situation with respect to the repatriation of Afghan refugees from Pakistan.

In Afghanistan, the number of people in need of humanitarian assistance has increased by 13%. In 2016, the figures rose to 9.3 million. Six of the eight regions of Afghanistan have from 1 to 2 million people in need of humanitarian assistance [25]. In addition, 1.3 million people received humanitarian assistance [26].

1/3 of the population in Afghanistan lives below the national poverty line. Chronic food insecurity affects about 40% of the population (11 million). 1.6 million Afghans (6%) have an extremely low food security status. The situation of 34% of the population is estimated as moderately severe. Severe acute malnutrition is recorded in 20 of the 34 provinces. At the same time, 1.3 million out of 1.8 million people in a critical situation are children under the age of 5 [27].

On May 1, 2017, the World Bank published an updated report on the status of poverty in Afghanistan, based on a Living Conditions Survey for 2013-2014 and 2011-2012. The number of people living in poverty has increased to 39% in 2013/2014 [28]. For the period from 2011/2012 to 2013/2014, poverty in rural areas increased from 38.3% to 43.6%. The worsening of living conditions in rural areas is mainly due to the deterioration of security measures and the reduction of international funds associated with the withdrawal of international armed forces from the country. It follows that the state of the households is closely correlated with the intensity of conflicts in the regions. Thus, in the southwestern provinces of Nimroz, Helmand, Kandahar, Zabul and Uruzgan, the quality of life was much lower than in the provinces of other regions [29].

 

Conclusions and generalizations

First, progress in the economic and social development of Afghanistan is still not enough. Owing to the programs of trust funds and international organizations, there has been a positive dynamic in various areas, but the cumulative effect of the conflict has exacerbated the situation of households and communities.

Second, Afghanistan’s 33 million people face record high internal migration, a critical food security situation and a limited or total lack of access to health services.

Third, the low share of the manufacturing sector in the economy, as well as high unemployment, slows the steady growth and economic recovery, continuing to aggravate the critical condition of the population. The deterioration in the security situation further undermines the prospects for increasing the well-being of the population and reducing poverty.

Fourth, socio-economic development remains extremely vulnerable to external factors, in addition to the intensity of conflicts, such as international funds and military operations. This confirms the need for long-term and comprehensive measures to reconstruct and restore the country.

__________________________

[1] Global Economic Prospects: South Asia Region //http://www.worldbank.org/en/region/sar/brief/global-economic-prospects-south-asia-region-gep.

[2] Islamic Republic of Afghanistan : First Review Under the Extended Credit Facility Arrangement and Request for Modification of Performance Criteria-Press Release; and Staff Report //http://www.imf.org/en/Publications/CR/Issues/2017/06/05/Islamic-Republic-of-Afghanistan-First-Review-Under-the-Extended-Credit-Facility-Arrangement-44968.

[3]Can Afghanistan’s Economy Rebound in 2017? //http://thediplomat.com/2017/01/can-afghanistans-economy-rebound-in-2017/.

[4] Afghanistan Overview //http://www.worldbank.org/en/country/afghanistan/overview.

[5]Afghanistan Living Conditions Survey Mid ? term result Highlights 2016-2017 //http://cso.gov.af/Content/files/ALCS/ALCS%20Mid-termresult-Highlights%202016-17.pdf

[6] Afghanistan Living Conditions Survey Mid ? term result Highlights 2016-2017 //http://cso.gov.af/Content/files/ALCS/ALCS%20Mid-termresult-Highlights%202016-17.pdf; Afghanistan poverty status update progress at risk //http://documents.worldbank.org/curated/en/667181493794491292/pdf/114741-WP-v1-P159553-PUBLIC.pdf

[7] Afghanistan poverty status update progress at risk

//http://documents.worldbank.org/curated/en/667181493794491292/pdf/114741-WP-v1-P159553-PUBLIC.pdf

[8] Там же.

[9] World Bank Announces +$500 million Afghanistan Financing //http://www.worldbank.org/en/news/press-release/2017/06/13/world-bank-announces-usd500-million-afghanistan-financing

[10] Afghanistan //https://www.unicef.org/appeals/afghanistan.html

[11] Afghanistan //http://www.unocha.org/afghanistan

[12] UN calls on parties to take urgent measures to halt civilian casualties, as numbers for 2016 reach record high //https://unama.unmissions.org/un-calls-parties-take-urgent-measures-halt-civilian-casualties-numbers-2016-reach-record-high

[13] Afghanistan //http://www.unocha.org/afghanistan

[14] Afghanistan Overview //http://www.worldbank.org/en/country/afghanistan/overview

[15] Afghanistan Overview //http://www.worldbank.org/en/country/afghanistan/overview

[16] Humanitarian needs overview 2017. Afghanistan // http://reliefweb.int/sites/reliefweb.int/files/resources/afg_2017_hno_english.pdf

[17] Afghanistan //http://www.unocha.org/afghanistan

[18] Overview of UNHCR’s operations in Asia and the Pacific //http://www.unhcr.org/57e8f0847.pdf

[19] AFGHANISTAN: Conflict Induced Displacements in 2017 ? Snapshot (as of 18 June 2017) //http://reliefweb.int/sites/reliefweb.int/files/resources/afg_conflict_idps_2017_jan_may_snapshot_20170518_v1_0.pdf

[20] Nearly 90,000 Afghans displaced in 2017, says UN//http://www.aljazeera.com/news/2017/05/90000-afghans-displaced-2017-170509101908636.html

[21] Overview of UNHCR’s operations in Asia and the Pacific //http://www.unhcr.org/57e8f0847.pdf

[22] Return of undocumented Afghans. Weekly Situation Report. 11-17 June 2017. //https://afghanistan.iom.int/sites/default/files/Reports/iom_afghanistan-_return_of_undocumented_afghans-_weekly_situation_report.pdf

[23] В Пакистане готовится масштабная программа регистрации афганских беженцев //http://afghanistan.ru/doc/110226.html

[24] Humanitarian needs overview 2017. Afghanistan // http://reliefweb.int/sites/reliefweb.int/files/resources/afg_2017_hno_english.pdf

[25] Ibd.

[26] Afghanistan //http://www.unocha.org/afghanistan

[27] Humanitarian needs overview 2017. Afghanistan // http://reliefweb.int/sites/reliefweb.int/files/resources/afg_2017_hno_english.pdf

[28] Afghanistan poverty status update progress at risk

//http://documents.worldbank.org/curated/en/667181493794491292/pdf/114741-WP-v1-P159553-PUBLIC.pdf

[29] Ibd.