The World Bank has published its Spring 2026 Afghanistan Development Update, saying Afghanistan’s economy continues to grow modestly despite regional tensions and border closures, but that growth is not improving living standards. Real GDP is estimated to have grown by 4.8 percent, supported by domestic demand and the return of millions of Afghans, yet rapid population growth, weak investment, and structural constraints are eroding the gains. The report says the return of about 3.7 million Afghans outpaced economic expansion, contributing to a 5.6 percent fall in GDP per capita. Inflation rose from an average of 3.6 percent to 7.6 percent by March 2026, driven by food prices, supply constraints, and strong demand, further weakening household purchasing power and worsening food insecurity and poverty. Domestic revenue collection improved to 19.8 percent of GDP in 2025 through stronger tax enforcement, but falling external grants limited infrastructure investment and shock response capacity. The external position also weakened, with the current account deficit estimated at 36.1 percent of GDP in 2025 as imports stayed strong and exports underperformed. Firm-level data showed a rebound in sales, employment, and investment since 2022, but unreliable electricity, limited access to finance, and informality continue to hold back sustained private sector growth. Looking ahead, the World Bank projects growth to moderate to around 4 percent in 2026, with downside risk tied to the duration and severity of conflict in the Middle East. Continued population growth, declining aid, and regional instability are expected to weigh on the outlook, while stronger private sector policies, better access to finance, infrastructure investment, and more productive employment are identified as priorities for sustaining recovery.
World Bank2026-05-26
World Bank finds Afghanistan's 4.8 percent growth is failing to raise incomes and may slow to around 4 percent in 2026
The World Bank’s Spring 2026 Afghanistan Development Update reports real GDP grew 4.8 percent, but rapid population growth, weak investment, and structural constraints caused a 5.6 percent fall in GDP per capita and worsening living standards. Inflation reached 7.6 percent by March 2026, the current account deficit widened to 36.1 percent of GDP, and declining external grants constrained infrastructure and shock response despite stronger domestic revenue collection. The World Bank projects growth to slow to about 4 percent in 2026 and calls for stronger private sector policies, better access to finance, and higher infrastructure investment to sustain recovery.