The World Bank, in its latest report, has warned that despite Afghanistan’s 4.8 percent economic growth in 2025, rapid population growth, the return of millions of migrants, rising inflation, and declining foreign aid have prevented this growth from improving living standards, while poverty, food insecurity, and economic pressures continue to intensify across the country. The report states that the return of around 3.7 million people has outpaced economic growth, resulting in a 5.6 percent decline in per capita Gross Domestic Product (GDP). According to the report, inflation has also increased, weakening households’ purchasing power. It further noted that rising food prices, driven by supply constraints and high demand, are worsening poverty and food insecurity. The World Bank emphasized that declining foreign aid has limited investment in infrastructure and reduced Afghanistan’s ability to cope with economic shocks. The bank also projected that Afghanistan’s economic growth will slow to around 4 percent in 2026.
The World Bank published its latest report on Tuesday, May 26, under the title “Afghanistan Development Update.” The bank stated that despite regional tensions and border closures, Afghanistan’s economy has continued to grow modestly. According to the World Bank, Afghanistan’s real GDP growth was estimated at about 4.8 percent.
The bank added that this growth was partly driven by strong domestic demand and the return of millions of migrants to the country. However, according to the report, the growth has not led to improvements in living standards or higher incomes.
Rapid population growth of around 11 percent in 2025, weak investment, and deepening structural constraints are eroding its benefits, according to the World Bank’s latest Afghanistan Development Update.
The World Bank further stated that the Spring 2026 report offers an in-depth assessment of recent economic developments and the medium-term outlook, with a special focus on private sector development. The report noted that the return of approximately 3.7 million people has outpaced economic growth, leading to a 5.6 percent decline in per capita GDP. At the same time, inflation has accelerated, further eroding household purchasing power.
The World Bank added that after averaging 3.6 percent, inflation rose to 7.6 percent by March 2026, driven by increasing food prices, supply constraints, and strong demand. According to the report, these developments are worsening the severe food insecurity and poverty crisis across Afghanistan.
The World Bank also stated that the domestic revenues of the “Taliban regime” have increased significantly.
“Domestic revenue collection improved significantly, reaching 19.8 percent of GDP in 2025, supported by stronger tax enforcement. However, a decline in external grants has resulted in limited investment in infrastructure and the ability to respond to economic shocks,” the World Bank said.
The report stated that the current account deficit is estimated to have widened to 36.1 percent of GDP in 2025, reflecting structural dependence on imports and declining external inflows.
In its report, the World Bank said that the private sector shows signs of resilience but remains constrained. Firm-level data indicate a rebound in sales, employment, and investment since 2022. However, structural barriers, including unreliable electricity, limited access to finance, and widespread informality, continue to impede sustained growth and job creation.
“Afghanistan’s economy is showing resilience in the face of significant headwinds, but growth alone is not enough,” said Faris Hadad-Zervos, World Bank Country Director for Afghanistan. “With millions of Afghans returning home, rapid population growth is outpacing economic gains – pushing down incomes and deepening poverty and fragility. Unlocking the private sector’s potential and improving access to finance are some of the essential steps to help drive job creation and, ultimately, improve people’s lives.”
The World Bank added that, looking ahead, economic growth is projected to moderate to around 4 percent in 2026, but may be lower depending on the duration and severity of the conflict in the Middle East. Continued population growth, declining aid, and external shocks, especially from regional instability, are expected to weigh on the outlook.
The report stressed that sustaining recovery will require policies that strengthen the private sector, improve access to finance, invest in infrastructure, and create opportunities for productive employment. Addressing structural constraints will be critical to improved livelihoods and more resilient, inclusive growth.
According to the report, the Afghanistan Development Update is part of the World Bank’s ongoing research, monitoring, and analytical work on Afghanistan’s economy and society. It aims to support evidence-based policymaking and inform the international community on economic developments in Afghanistan.
This comes as the Global Network Against Food Crises (GNAFC) previously reported that Afghanistan is among the ten countries facing the world’s most severe food crises. According to its 2026 report, the number of people experiencing acute hunger worldwide has doubled over the past decade, and for the first time, two famines were recorded within a single year.
At the same time, videos circulating on social media from different parts of Afghanistan show widespread poverty and desperation among the population. In some of these videos, people express concern about severe hunger and unemployment, with reports that some families have even attempted to sell their daughters due to extreme poverty. In the latest case, the BBC reported that a man in Ghor allegedly tried to sell his young daughter because of poverty. Reports also indicate that killings and armed robberies linked to widespread poverty have increased.
