The World Bank has projected that Afghanistan’s economy will grow by 4.0 percent in 2026, driven by stronger domestic demand, higher private investment and the gradual integration of returnees into the labor market.
In its latest report, the World Bank anticipates a 4.0 percent growth for Afghanistan’s economy in 2026, fueled by robust domestic demand, increased private sector investment and better absorption of returnees into the workforce.
The report also highlights that ongoing conflicts in the Middle East could slow economic growth and exacerbate inflation, even if alternative trade routes are partially utilized.
Additionally, the continued return of Afghan migrants from neighboring countries is placing further strain on the economy.
One of the primary risks identified is Afghanistan’s heavy reliance on trade routes through Iran, which account for approximately 60 percent of the country’s total trade. Any disruption—particularly amid the ongoing regional conflicts—could hamper growth and increase inflation, even if alternative routes are partially used.
The report warns that a sudden and large influx of returnees could lead to a further decline in per capita income in the short term, as the labor market struggles to absorb the additional workforce and create sufficient job opportunities.
After a 1.9 percent growth in 2024, Afghanistan’s GDP is expected to accelerate to 4.8 percent in 2025, before moderating slightly to 4.0 percent in 2026. However, per capita growth remained negative in 2025 and is projected to recover only modestly.
The report concludes by noting that Afghanistan’s economy in 2025 will face several external shocks, including a sharp decline in foreign aid, prolonged closures of border crossings with Pakistan, droughts, earthquakes,and the large-scale return of migrants from Iran and Pakistan.
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