Economy in Afghanistan
/ 6 min read
1. Poverty
- Afghanistan has seen a rapid increase in poverty, with the poverty ratio increasing from 26.47% in 2013 to a staggering 65.16% in 2024. This alarming trend reflects the deepening economic crisis and its impact on the population, with more than half of Afghans now living below the poverty line.
- Between 2021 and 2024, Afghanistan's poverty ratio skyrocketed from 44.13% to 65.16%. This steep increase highlights the severe economic challenges faced by the country, likely exacerbated by political instability, unemployment, and lack of international aid.
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Data for Afghanistan. (2024). Poverty headcount ratio (%) at $2.15 per day, 2000 to 2024 [Data visualization]. https://dataforafghanistan.org/posts/economy/#1-poverty. Licensed under CC BY-ND-NC 4.0.
2. Unemployment
- Afghanistan's unemployment rate has shown a consistent upward trend, rising from 7.91% in 2013 to 16.34% in 2024. The doubling of the unemployment rate over a decade underscores the challenges in the labor market and the need for robust economic policies to create jobs.
- The unemployment rate in Afghanistan jumped from 12.08% in 2021 to 16.34% in 2024. This sharp increase suggests a deteriorating economic environment, with more Afghans struggling to find employment amid growing uncertainties.
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Data for Afghanistan. (2024). Unemployment rate (%), 2000 to 2024 [Data visualization]. https://dataforafghanistan.org/posts/economy/#2-unemployment. Licensed under CC BY-ND-NC 4.0.
- The ratio of female-to-male labor force participation in Afghanistan has seen a sharp decline in recent years, plummeting from 21.84% in 2021 to just 6.99% in 2023. This sharp drop indicates a growing disparity, with far fewer women participating in the workforce compared to men.
- The ratio, which measures the percentage of working-age women actively engaged in the workforce compared to men, had been gradually increasing from 19.25% in 2000, peaking at 28.94% in 2017. However, this trend reversed after 2017, reflecting increasing challenges for women to enter or remain in the workforce.
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Data for Afghanistan. (2024). Ratio of female-to-male labor force participation rate (%), 2000 to 2023 [Data visualization]. https://dataforafghanistan.org/posts/economy/#2-unemployment. Licensed under CC BY-ND-NC 4.0.
3. Life Satisfaction
- Afghanistan has experienced a sharp decrease in self-reported life satisfaction over the years. The life satisfaction score dropped from 4.76 in 2010 to a low of 1.28 in 2022, reflecting life dissatisfaction among Afghans. In fact, the life satisfaction score has never been above 5 over the years.
- The data suggests a potential correlation between rising unemployment rates and decreasing life satisfaction. As unemployment increased from 7.93% in 2008 to 15.38% in 2023, life satisfaction scores fell from 3.72 to 1.45, highlighting the relationship of economic instability with the well-being of Afghans. Other socioeconomic factors may also be related to life satisfaction, needing further investigation.
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Data for Afghanistan. (2024). Self-reported Life Satisfaction (0-10 scale), 2008 to 2023 [Data visualization]. https://dataforafghanistan.org/posts/economy/#3-life-satisfaction. Licensed under CC BY-ND-NC 4.0.
4. GDP
- Afghanistan’s real GDP per capita saw a relatively steady increase from 2002 to 2013, peaking at $582.1 in 2013. Considerable economic growth happened in earlier years, such as an 11.8% increase in GDP per capita in 2007 and a 17.14% increase in 2009. Economic growth from 2001 to 2013 was driven by periods of rapid development, foreign aid, and reconstruction efforts.
- Afghanistan's real GDP per capita experienced a significant contraction of 23% in 2021 and continued to shrink by 8.59% in 2022. The dramatic fall in GDP per capita after 2021 was mainly due to political instability and the withdrawal of international aid.
- Afghanistan’s real GDP per capita has faced substantial fluctuations over the past two decades, with periods of growth and contraction reflecting an unstable economic environment impacted by ongoing conflicts, political changes, and dependency on international support.
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Data for Afghanistan. (2024). Constant GDP per capita and annual growth, 2000 to 2022 [Data visualization]. https://dataforafghanistan.org/posts/economy/#4-gdp. Data retrieved from the World Bank. Licensed under CC BY-ND-NC 4.0.
5. Inflation
- Afghanistan experienced a significant inflation spike of 35.7% in 2003, mainly due to uncertainty surrounding the introduction of the new Afghani currency, which caused depreciation and a sharp rise in prices. Another major inflation spike of 26.4% occurred in 2008, largely driven by soaring global food and fuel prices. This also reflects Afghanistan’s vulnerability to external market conditions.
- Inflation stabilized from 2010 to 2020, despite some fluctuations. Inflationary pressures returned in 2021 (7.8%) and 2022 (10.6%), mainly due an increase in the prices of food commodities, reflecting global spikes in the prices of food commodities and supply chain disruptions.
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Data for Afghanistan. (2024). Inflation rate (annual % change), 2002 to 2022 [Data visualization]. https://dataforafghanistan.org/posts/economy/#5-inflation. Data retrieved from the IMF. Licensed under CC BY-ND-NC 4.0.
6. US Funding
- Security funding reached its highest point in 2011, with $11,034 million allocated, reflecting a major focus on Afghan security forces and counter-narcotics activities. By 2022, this figure dropped to just $100 million.
- Development funding reached $5,319 million in 2010 but kept decreasing in the following years, dropping to just $217 million by 2022, highlighting a shift in US development efforts in Afghanistan.
- Humanitarian assistance saw a major spike in 2022, with $1,078 million allocated, a significant increase from previous years, highlighting the key focus being disaster and refugee assistance
Cite this work:
Data for Afghanistan. (2024). Annual U.S. Funding Made Available for Afghanistan Reconstruction (in millions), 2002 to 2024 [Data visualization]. https://dataforafghanistan.org/posts/economy/#6-us-funding. Data retrieved from the SIGAR. Licensed under CC BY-ND-NC 4.0.