Economy

Growing political stability and continued international commitment to Afghan reconstruction create an optimistic outlook for maintaining improvements to the Afghan economy in 2004.

Overview

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About 80 per cent of the Afghan population is engaged in agriculture, while almost the entire fifth not in agriculture are nomads, travelling to their summer quarters (yaylaqs) in the highlands in summer, and returning to the lowlands to stay in their winter residences (qishlaqs) in winter.

Among the agriculturists are the landed gentry (those who own between 50 and 500 acres of land) and the farmers.

The gentry are also involved in commerce, and some from this group hold high positions in government. In contrast the farmers are a poorer lot.

The well-off farmers own between 20 and 50 acres of land, the moderately rich ones own between 8 and 20, while the petty landowners own between 3 and 8 acres.

This group sometimes rent in land from the richer groups to cultivate. However, nearly 85 per cent of Afghan agriculturists are landless peasants, for whom the only available occupation is to work in the fields of the three richer groups.

Afghanistan does not have a rich industry. In fact industry in the country has been barely above the cottage industry level. Before the Soviets came into the country, around 60,000 workers were working in the industrial sector.

Centuries ago Afghanistan was part of an ancient trade route that supplied the West with spices, rich silks and other goods. The country's impoverished people still cling to trade as a means of survival.

Battered by two decades of war and political in-fighting, Afghanistan has had little else to depend on. Most economic data for Afghanistan dried up in 1979 following the Soviet invasion and became non-existent after 1993. But according to a United Nations rehabilitation action plan in 1993, the country's economy was worth 124.7bn Afghanis ($1.72bn) in 1991-1992.

'Poor' past: The economy of Afghanistan was in a shambles. Even in the 1970s, prior to the war, Afghanistan had one of the lowest standards of living in the world; things have declined since then, with the production, trafficking, and movement of drugs and guns as a major hidden part of the economy.

As the war and its effects spread throughout the nation in the early 1980s, two separate economies emerged; the urban financial and industrial facilities, tied particularly to the Soviet Union, and the largely independent rural subsistence economy. In 1990 annual income was around to be $714 per person.

Present status: Fact is, Afghanistan remains extremely poor, landlocked, and highly dependent on foreign aid, farming, and trade with neighbouring countries.

Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs, but the Afghan government and international donors remain committed to improving access to these basic necessities by prioritising infrastructure development, education, housing development, jobs programmes, and economic reform over the next year.

Growing political stability and continued international commitment to Afghan reconstruction create an optimistic outlook for maintaining improvements to the Afghan economy in 2004.

[The replacement of the opium trade - which may account for one-third of GDP - is one of several potential spoilers for the economy over the long term.]

Afghanistan's economic dared to look up of late, because of the infusion of over $2 billion in international assistance, dramatic improvements in agricultural production, and the end of a four-year drought in most of the country.

It will probably take the remainder of the decade and continuing donor aid and attention to raise Afghanistan's living standards up from its current status among the lowest in the world.

Facts:

Agriculture - products: Opium, wheat, fruits, nuts, wool, mutton, sheepskins, lambskins

Industries: Small-scale production of textiles, soap, furniture, shoes, fertilizer, cement; handwoven carpets; natural gas, coal, copper

Electricity - production: 334.8 million kwh (2001)

Electricity - consumption: 511.4 million kwh (2001)

Electricity - imports: 200 million kwh (2001)

Oil - consumption: 3,500 bbl/day (2001 est.)

Budget: revenues: $200 million; expenditures: $550 million, including capital expenditures of NA (2003 plan)

Population below poverty line: 23% (2004)

GDP: Purchasing power parity - $20 billion (2003 est.)

GDP: Purchasing power parity - $20 billion (2003 est.)

GDP - Per capita: Purchasing power parity - $700 (2003 est.)