Afghanistan faced severe economicheadwinds in 2018, with the economy growing by an estimated1.8 percent. Slow growth was driven by two major factors.Firstly, severe drought had a strong negative impact onagricultural production. Agricultural growth slowed to 0.8percent as low snowfall during late 2017 and early 2018 ledto the loss of grain crops and livestock productivity.Secondly, business and investor confidence deterioratedsignificantly in the context of elevated uncertainty around:i) the level and duration of international securityassistance; ii) the outcome of upcoming presidentialelections (now delayed until September); iii) prospects ofcontinued or worsening election-related violence (civiliandeaths reached their highest level since 2001); and iv)ongoing peace negotiations with the Taliban. Real GDP growthis expected to have accelerated during the first half of2019, mainly driven by the easing of drought conditions andimproved agricultural production. Intensifying politicaluncertainties, however, are expected to have continued todampen private sector confidence and investment. Poverty isestimated to have increased and deepened. The rate ofeconomic growth substantially lagged population growth,leading to declining per capita incomes. The droughtnegatively impacted livelihoods of many of the 82 percent ofthe poor living in rural areas, including those reliant onpoppy cultivation (poppy production declined by 30 percent).Reflecting widespread hardship, drought-induced displacementreached record levels of 298,582 individuals, mainly tourban areas in adjacent provinces.
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