Afghanistan’s formal economy has suffered a “catastrophic collapse” since the Taliban came to power, wiping out in less than a year what had taken 10 years to build, the United Nations said in a report released Wednesday.
Before the Taliban took power in August 2021, the Afghan economy was already very small, with a GDP of about $20 billion.
But in just one year it “lost about $5 billion,” Kanni Wignaraja, director of the United Nations Development Programme (UNDP) for Asia and the Pacific, told a news conference.
“That’s about 10 years’ worth of accumulated assets and wealth that just got lost in 10 months,” Wignaraja said. “That kind of dramatic collapse we’ve not seen anywhere in the world.”
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While the price of a basic food basket has increased by 35 percent since August 2021, Afghans spend “60 to 70 percent, some of them even 80 percent, of their income, household income, on food and fuel,” she said.
Meanwhile, 95 to 97 percent of the population now lives below the poverty line, she said. That figure is up from a little more than 70 percent just a year ago.
The report paints a bleak picture of the country’s economy, highlighting a collapse of the banking and financial systems, with 700,000 jobs lost by mid-2022, mostly by women, and one in five children at risk of severe malnutrition, particularly in the south.
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The collapse of the formal economy has also led to an increase in the importance of the informal economy, which represents 12 to 18 percent of gross domestic product, compared to nine to 14 percent a year ago, the report said.
Abdallah Al Dardari, the UNDP’s resident representative in Afghanistan, said humanitarian assistance alone cannot compensate for the economic collapse, adding that the number of Afghans needing assistance has climbed from 19 million people to 22 million people in just 14 months.
So over the next three years, “we want to create two million jobs through a revival of the private sector, through working with local communities, through focusing on women entrepreneurs,” and by reviving agricultural productivity, micro-finance and banking, he said.
AFP with additional input by GVS News Desk