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Afghanistan’s economy is likely to collapse with the rapid withdrawal of US troops and the return of the Taliban to power, Fitch Solutions said in a report.
Fitch currently expects the country’s real gross domestic product (GDP) to shrink 9.7% this fiscal year and another 5.2% next year. Previously, we expected growth of 0.4% this year.
“The very devastating way the US security forces left the country and the Taliban hijacked meant that the country’s financial distress would be felt serious in the short term,” analysts said. Credit rating agency Fitch Group.
“Given the other economies that faced similar types of political shocks and led to the collapse of the institution, the risks to these forecasts weigh on the downside.”
In the long run, the basic case of Fitch Solutions is an average of 1.2% slow growth from 2023 to 2030, well below the average 6% growth from 2002 to 2020.
Foreign investment is needed to support more optimistic cases, Fitch said.
“Alternative and more positive economic scenarios will be accompanied by an average of about 2.2% Afghanistan growth in 2023-2030. This is because some major economies, namely China and potentially Russia, have Tullivan in Afghanistan. We assume that we will accept it as a legitimate government and start major investment projects.
Report by Tom Westbrook; edited by Christopher Cushing and Kim Coghill.