The Afghanistan Development Update is atwice-annual publication providing analysis of recentdevelopments and presenting the World Bank team’smost-recent macroeconomic projections. The August 2018edition focuses on the state of the economy in the contextof upcoming elections, and the potential for a loss ofrecent momentum as confidence declines. Special topicsaddress: i) the potential for trade to underpin developmentin Afghanistan; ii) recent trends in poverty and welfare;and iii) priorities for improving education quality andcoverage.Afghanistan has experienced slow growth since2014, with the draw-down of international security forces,accompanying reductions in international grants, and aworsening security situation (growth has averaged 2.3percent between 2014-2017). Following a period of politicalinstability after the 2014 elections, the economy has slowlyregained momentum as reforms have been implemented andconfidence restored. From a low of 1.5 percent in 2015, realGDP growth accelerated to 2.3 percent in 2016, and isestimated at 2.7 percent for 2017. Building momentum nowappears to be at some risk, with increasing election-relatedviolence, declining business confidence, worsening droughtconditions, and some apparent slowing of economic activity.Growth is projected at 2.4 percent in 2018, with substantialdownside risks arising from the prospects of politicalinstability around upcoming parliamentary and presidentialelections. Risks can be partly mitigated and recent momentummaintained through: i) continued reform progress,demonstrating to investors that the deterioration ingovernance seen in 2014 will not be repeated; and ii)continued donor commitment to sustained grant support.
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