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- GDP (PPP):
- $60.6 billion
- 1.5% growth
- 6.8% 5-year compound annual growth
- $1,937 per capita
- Inflation (CPI):
- FDI Inflow:
Afghanistan’s economic freedom cannot be fully assessed because of the lack of reliable comparable data. The government’s compilations of official economic data are inadequate, and data on Afghanistan in many of the international sources relied upon for Index grading are incomplete. Afghanistan’s economic freedom will be ranked in future editions when more reliable information becomes available.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: Not Graded
- Economic Freedom Status: Not Graded
- Global Ranking: Not Ranked
- Regional Ranking: Not Ranked in the Asia–Pacific Region
- Notable Successes: N/A
- Concerns: N/A
- Overall Score Change Since 2012: N/A
Afghanistan’s overall economic environment is undermined by ongoing political and security challenges, and the inability to deliver basic services on a reliable basis has severely eroded confidence in the government. The economy is hobbled by insurgency and corruption. The agricultural sector depends heavily on cultivation of opium poppies.
Ashraf Ghani Ahmadzai became president following an election marred by allegations of vote-rigging in 2014. After three months of political wrangling, Ghani and former Foreign Minister Abdullah Abdullah agreed to form a unity government. Ghani, who won the election according to Afghanistan’s Independent Election Commission, shares power with Abdullah, who is chief executive officer. Ghani signed a Bilateral Security Agreement with the U.S. in September 2014, opening the way for a continued non-combat U.S. presence. Taliban insurgents continue to attack Afghan security forces and civilians. In October 2015, President Obama announced that the United States would keep thousands of troops in Afghanistan through the end of his term in 2017.
The transfer of security responsibility to Afghan forces and planned phasedown of international troops increase uncertainty as the government confronts high levels of corruption, heavy and persistent drug trafficking, weak institutional capacity, and a severely underdeveloped judicial system. Weak protection of property rights due to a lack of property registries or a land titling database leads to land title disputes.
The top income and corporate tax rates are 20 percent. Driven by sales taxes, overall tax revenue equals about 7 percent of total domestic income. Government spending has moderated, but the government still relies heavily on foreign assistance. Two years of political and security uncertainty have resulted in reduced economic activity and the emergence of significant fiscal vulnerabilities.
Despite efforts to streamline the procedures for establishing a business, bureaucratic impediments to private-sector production and investment still hamper the overall regulatory environment. The labor market remains severely underdeveloped, with the 2009 labor law poorly implemented. Due to the severe underdevelopment of the financial system, the government has very limited influence on monetary policy.
Afghanistan’s customs system is complex, and importation of goods generally takes many weeks. With the exception of land ownership, foreign and domestic investors are treated the same under the law. The financial sector remains underdeveloped, and scarce access to financing hinders private-sector growth. Three state banks and over 15 commercial banks are in operation across the country, but trust in the banking system is weak.