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Afghanistan Country Risk Report 2017

Afghanistan Country Risk Report 2017

Core Views

The conflict in Afghanistan will continue as the sharp reduction in NATO forces emboldens the Taliban insurgency and weakens the economy. Even if the conflict eventually winds down, Afghanistan will face colossal development challenges that will take at least a generation to overcome.

Afghanistan's political outlook is unlikely to see a significant improvement over the coming quarters as the Taliban continues to gain ground amid a growing Islamic State presence. While the US is likely to send additional troops to boost security, this is unlikely to have a significant impact, and the fighting also led to delays in the 2018 parliamentary elections.
0 Afghanistan continues to face considerable challenges in rebuilding its war-torn economy and the contracts it has signed with China will go some way in providing support for the development of the country's infrastructure. In addition, the improvement in the public procurement process will be positive for the business environment and reduce expenditure. We therefore forecast Afghanistan's real GDP to expand by 3.1% in FY2017/18 (April-March). However, the deteriorating security outlook poses downside risks to our forecast.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Infrastructure To Be Main Growth Driver
Afghanistan continues to face considerable challenges in rebuilding its war-torn economy, and the contracts it has signed with China
will go some way in providing support for the development of the country's infrastructure. In addition, the improvement in the public
procurement process will be positive for the business environment and reduce expenditure. We therefore forecast Afghanistan's real
GDP to expand by 3.1% in FY2017/18 (April-March). However, the deteriorating security outlook poses downside risks to our forecast.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: MAIN IMPORTS AND EXPORTS
TABLE: MAIN IMPORT AND EXPORT PARTNERS
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Monetary Policy Framework
Long-Term Economic Outlook
Economy To Struggle In Post-NATO Era
Afghanistan's economy will slow sharply in 2017-2026 compared to the previous 10 years, as the departure of NATO troops and a
reduction in foreign aid depress economic activity. Continued fighting will also harm the economy.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 2: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Security Situation To Worsen As Taliban And IS Gain Ground
Afghanistan's political outlook is likely to deteriorate over the coming quarters, as the Taliban continues to gain ground, Islamic State
develops its own presence and President Ghani faces rising internal challenges to his authority. Although the US is likely to send
additional troops to boost security, this is unlikely to have a significant impact, and the fighting could also delay the 2018 parliamentary
elections.
Long-Term Political Outlook
Colossal Challenges, Even Without War
The conflict in Afghanistan is set to continue indefinitely, as the Taliban insurgency gains ground and Islamic State seeks to establish
a presence. Even if the conflict eventually winds down, Afghanistan will face colossal development challenges that will take at least a
generation to overcome.
Contents
Chapter 3: Demographic Outlook
Demographic Outlook
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP, %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
Chapter 4: BMI Global Macro Outlook
Global Macro Outlook
EM Recovery To Drive Global Growth
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: AFGHANISTAN – MACROECONOMIC DATA & FORECASTS

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