Afghanistan Development Update : Sustaining Returns - Challenges and Opportunities

Overview & Synopsis

This report examines recent economic developments and the outlook for Afghanistan, highlighting modest economic growth supported by low inflation and stronger revenues despite significant challenges. The report notes that rapid population growth, driven in part by the return of millions of migrants and refugees, weak investment, fiscal constraints, and declining external assistance continue to limit improvements in per capita income and living standards. It discusses trends in poverty, food security, fiscal performance, trade, and financial sector stability, while assessing the opportunities and risks associated with large-scale return migration. The report emphasizes that sustained economic recovery will require increased private investment, stronger financial intermediation, export diversification, and policies that support the productive integration of returnees into the economy. It also highlights the need to transform the ongoing returnee influx into a driver of long-term economic development and resilience.