Afghanistan’s economy might shrink after Taliban takeover

In its latest economic report, the IMF said that Afghanistan’s gross domestic product might detect a reduction of around 30% after the Taliban takeover.

The Director of the IMF’s Middle East and Central Asia department, Jihad Azour, said that the country’s condition was getting worse, even before the Taliban takeover. He told CNBC’s Hadley Gamble that the nation was facing severe challenges produced by the current pandemic. He added that what they anticipate is a sharp contraction.

The report also noted that Afghanistan banned non-humanitarian aid, froze foreign assets. Besides, cash shortages paralyzed afghan banks after the Taliban takeover.

The report said that these crashes might soon cause around 30% product contraction, declining imports, and accelerating inflation. This decline in living standards might lead to a humanitarian crisis after pushing millions into poverty.

Additionally, while highlighting the need for assistance from the international community, the IMF said that the situation would increase the number of Afghan refugees. These results will burden public resources in refugee-hosting countries, create social tensions while pressuring the labor market.

According to Azour, the IMF greets the international community’s humanitarian aid. He also said that there should be a focus on health services and education.

Economic outlook

The IMF (International Monetary Fund) also increased its vision for the North Africa region and the Middle East.

It expects real GDP to increase 4.2% in 2021 and 2022, up 0.2% points and 0.5% points from its April forecast.

In the Caucasus region and Central Asia, the IMF expects GDP to grow 4.4% in 2021 and 4.2% in 2022.

The IMF predicts that the improvements remain unusual shaped by numerous factors, including high oil costs and vaccination rates.

Azour said that not all countries are growing simultaneously, and multiple issues are blocking the development.