A Persistently Weak, Below-Subsistence Economy with Large Humanitarian Aid Needs and No Improvement in Sight

The chapter examines the economic decline and humanitarian crisis in Afghanistan following the Taliban’s takeover in August 2021. Utilizing data from the World Bank, United Nations, and other sources, it outlines the initial free-fall of the Afghan economy caused by the abrupt end of foreign aid and the disconnect from international financial institutions. The chapter argues that despite some stabilization through effective macroeconomic management by the Taliban and the inflow of humanitarian aid, the economy remains fragile, with many Afghans living below the subsistence level. New economic shocks, in 2023, including reduced humanitarian aid and the Taliban’s opium ban, threaten further decline. The chapter concludes with recommendations for donors to ensure gradual aid reduction, improve aid efficiency, and support economic activities, while urging the Taliban to adjust harmful policies.