World Bank: Afghanistan’s Economy to Grow by 4% in 2026

In its latest report, the World Bank has projected that Afghanistan’s economy will grow by around 4 percent in 2026. 

According to the institution, this growth will be driven by stronger domestic demand, increased private sector investment, and improved absorption of returnees into the labor market.

However, the report warns that ongoing conflicts in the Middle East could pose a serious threat to Afghanistan’s economy.

The report states: “Ongoing conflict in the Middle East poses a major risk, as it can negatively affect the economy through trade disruptions and increased migration flows.”

The World Bank also emphasized that Afghanistan’s significant reliance on trade routes through Iran could reduce economic growth and increase inflation if these corridors are disrupted.

The report adds: “With around 60 percent of Afghanistan’s trade routed through the Islamic Republic of Iran, closure of this corridor could reduce annual economic growth and raise inflation, although trade rerouting could partially offset the impact.”

In another section, the report notes that Afghanistan’s economy remained fragile in 2025 and only modestly recovered from the sharp contractions of 2021–2022.

According to the report, GDP grew by about 4.8 percent in 2025, mainly driven by increased private consumption and a rebound in non-agricultural activities.

Despite this growth, rapid population increase and rising inflation led to a 5.6 percent decline in per capita GDP.

The report further states that Afghanistan’s economy in 2025 faced a series of major external shocks, including a sharp decline in foreign aid, prolonged crossing closures with Pakistan, drought, earthquakes, and large-scale return of migrants from Iran and Pakistan.

These factors collectively resulted in an estimated 11 percent population increase, largely driven by net migration, placing additional pressure on the country’s economic structure.