BENGALURU: Afghanistan’s financial system might shrink by as a lot as 20 per cent this yr and its foreign money could slide additional than it already has following the Taliban’s takeover, Fitch Options mentioned on Friday.
The Taliban seized energy final weekend from a US-backed authorities, sending hundreds fleeing and doubtlessly heralding a return to the militants’ austere and autocratic rule of twenty years in the past.
“It is likely that the economy will contract sharply this year,” Anwita Basu, head of Asia Nation Threat at Fitch Options — the evaluation and analysis arm of Fitch Group — advised Reuters.
“Countries facing similar circumstances like Myanmar and Syria have seen their GDPs collapse by around 10-20pc, which can’t be ruled out for Afghanistan too.” Basu mentioned international grants and support, a serious supply of Afghanistan’s funding, will dry up considerably this yr if not past.
Fitch Options says grants and support, a serious supply of Afghan funding, will dry up considerably this yr
“Already some figures from the UN (United Nations) suggest that aid would have fallen by at least 20pc from 2020 levels in 2021 following the US departure but that did not account for the Taliban’s takeover in this rapid way”, she mentioned in emailed feedback.
Basu mentioned Afghanistan’s foreign money, the afghani, which has already weakened greater than 7pc this month in opposition to the US greenback, could fall extra as a result of many of the state’s foreign-held belongings have been frozen to cease the Taliban from gaining entry. She added that hyper-inflation can’t be dominated out.
Afghanistan’s fragile well being system has been broken by a long time of struggle. The nation’s prospects for acquiring Covid-19 vaccines had been at all times poor however now the scenario has turn into “bleak”, based on Basu.
The Taliban’s takeover was not solely inflicting concern over Afghanistan’s future but additionally concerning the impression on different international locations within the area and their economies.
Score company Moody’s Buyers Service has warned of geopolitical and financial dangers for the area.
“For its neighbours, the immediate risk to credit profiles from the political uncertainty in Afghanistan relates to a potentially large inflow of refugees,” Moody’s mentioned on Monday, including that Pakistan might even see the biggest inflow of refugees.
Printed in Daybreak, August 21st, 2021
