Fact Sheet
Office of the Spokesman
Washington, DC
January 31, 2006
Economy and Business Climate
In a few short years, Afghanistan’s leaders have made great progress in building a new foundation for their country’s shattered economy. With help from the international community, they established a new currency, managed inflation, and steadily improved the business climate with new economic laws, development of the banking sector, customs and tax reform, and better fiscal accountability.
Real progress:
Growth: IMF estimates of real GDP growth were 16% in 2003-04; 8% for 2004-05; and 14% for 2005-06. Active sectors include construction, telecommunications and hotels/services.
Exports: Exports increased from an estimated $300 million last year to an expected $500 million in 2005-06, although imports will likely outpace exports for the next several years as the country rebuilds.
Regional integration: The Afghan government is actively working to improve its trade relations and develop energy and transportation corridors with its neighbors as it seeks to re-establish its traditional role as a "land bridge" between Central and South Asia.
Of course, challenges remain:
Narcotics: In 2005, narcotics trade was equivalent to about 52% of Afghanistan’s legitimate GDP. Acreage under poppy cultivation declined significantly from 2004, but because of better growing conditions the decline in total opium yield was smaller.
Infrastructure: Afghanistan needs more roads, electrical power, water infrastructure, and other transportation services.
Laws: A modern legal and regulatory framework is needed to support commercial activity. Some basic investment and economic laws still need to be adopted and implementing regulations and standards developed.
2006/118
Released on January 30, 2006
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