Turbulent US exit from Afghanistan sees GDP fall by 9.7%

In a report Fitch Solutions said, Afghanistan’s economy is likely to collapse following the turbulent withdrawal of U.S. forces following the Taliban’s grabbing power.

The research arm of the credit ratings agency now expects the country’s real gross domestic product (GDP) to fall by 9.7% this financial year; it is expected to further drop by 5.2% in 2021-2022.

“The highly disruptive manner in which the U.S.’s security forces left the country and the Taliban takeover will mean that the economic pains for the country will be felt acutely over the short term,” said analysts in a report from Fitch Solutions.

Fitch Solutions is the research arm of credit ratings agency Fitch Group.

“The risks to these forecasts are weighted to the downside, given that other economies that have faced similar types of political shocks that have also led to institutional collapse.”

In the long term, Fitch Solutions sees a slow growth averaging at 1.2% from 2023 through to 2030, below the 6% growth averaged from 2002 until 2020.

Foreign investment would be needed to support a more optimistic case, said Fitch.

“An alternative and more positive economic scenario would entail Afghanistan’s growth averaging around 2.2% in 2023-2030, which assumes that some major economies, namely China and potentially Russia, would accept the Taliban as the legitimate government of Afghanistan and begin major investment projects.”

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