Sharp drop in Afghan growth rate in 2013: WB

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Painting a grim picture of the Afghan economy, the World Bank (WB) on Wednesday estimated the country’s growth rate at 3.1 percent in the year 2013; which is a sharp drop from 14.4 percent in the previous year.

“Growth in Afghanistan weakened sharply to an estimated 3.1 percent in 2013 from an exceptionally high 14.4 percent in 2012,” the WB said in its Global Economic Prospects (GEP) report released Wednesday.

The WB said the withdrawal of international forces would affect Afghanistan, as previously donor-financed expenditure would need to be financed from budget expenditure.

“Afghanistan’s GDP growth is projected at 3.5 percent for 2014 (a slight improvement from an estimated 3.1 percent in 2013), before rising gradually to around five percent as the security situation stabilizes and mining projects come online,” the Bank said.

As the presence of international forces in Afghanistan winds down, reductions in Coalition Support Funds for Pakistan are likely to be offset by continued disbursements under the IMF’s extended fund facility and robust inflows of remittances, it said.

In Afghanistan, the combination of political transition and withdrawal of international forces in 2014 could pose risks to the country’s fiscal sustainability and growth, the bank said.

The GDP growth in South Asia is projected to improve to 5.7 percent in 2014, rising gradually to 6.7 percent in 2016, led mainly by recovering high income import demand and regional investment.

Global GDP growth is projected to firm from 2.4 percent in 2013 to 3.2 percent this year, stabilizing at 3.4 percent and 3.5 percent in 2015 and 2016, respectively, with much of the initial acceleration reflecting stronger growth in high-income economies.

“We expect developing country growth to rise above 5 percent in 2014, with some countries doing considerably better, with Angola at 8 percent, China 7.7 percent, and India at 6.2 percent,” said Kaushik Basu, Senior Vice President and Chief Economist at the WB.