Afghanistan’s economy is heading close to collapse and it is putting an end to online shopping services in the country.
Afghanistan is in an economic crisis, It is facing an alarming humanitarian crisis as hunger sweeps through the country and the economy is on the verge of collapse. As the Taliban’s regime marks a year, here is a look at what is the reason behind the collapse.
The events have veered around for the worst, as the current regime is unable to provide basic facilities of sustenance and health care to a population of 40 million. Afghanistan is facing a threefold crisis – developmental, economic and humanitarian simultaneously.
Factors Leading Afghanistan In Economic Crisis
Afghanistan was already struggling with widespread poverty and unemployment. Situated in 104th position in terms of GDP growth, and an economy worth 70 billion, Afghanistan is a country plagued by persisting social, political and economic crises. The years of conflict, the Covid-19 pandemic and consecutive droughts have already exhausted a large fraction of the Afghan population. Afghanistan in Economic Crisis.
Instability and corruption have constantly hampered development and it has only worsened since the United States departed from Afghanistan last year. The Taliban’s sudden transition into the government has been exacerbating the subsisting problems. Most of the issues of hunger, poverty, currency shortage and loss of income are directly corresponding to the economic collapse the country is encountering.
Afghanistan has extensively depended on foreign aid to sustain itself through the last 20 years. With 75% of public and government expenditure consisting of international and developmental aid, the people have been left miserably impoverished. Afghanistan in Economic Crisis.
After the Taliban’s sudden takeover, most of these donations have been revoked. This is sending economic shocks throughout the nation as it provided a foundation for Afghanistan’s economy.
In addition to this, the banking sector in Afghanistan has been incapacitated by the declaration of various countries including the United States to cut off the Central Bank of Afghanistan from the international banking system. It has resulted in a liquidity crisis and a cash shortage across the country.
This cutoff has amplified the economic crisis as it is resulting in currency shortages, limitations imposed on transactions, and suspended foreign transactions inducing a widespread hardship for the banking sector. Afghanistan in Economic Crisis.
The freezing of Afghan’s central bank assets has impacted the economy negatively, delaying the economic recovery. With more than $7 billion of Afghanistan’s foreign exchange revenue being frozen and the country grappling with an economic crisis, humanitarian concerns have been rising.
The international sanctions imposed on the transactions have deterred economic advancement, rendering businesses and the investment sector stagnant or ceasing entirely. With no economic activity, suspended imports and shortages of prospects with purchasing power due to inflation surges and paralyzed banking system, the economic state of Afghanistan is severe. Though international sanctions have been imposed on the Taliban administrators, the far-reaching implications have affected the nation’s economy.
Furthermore, the global defiance to recognize the Taliban’s formulated government has caused the economic crisis to aggravate. As Afghanistan goes into isolation, excluded from the global economy, the Taliban’s strategy for revenue generation has been fairly inadequate to curb the impending collapse of the economy.
This is making it hard for people to deal with the loss of currency value and skyrocketing prices for essentials. The soaring inflation rate is aggravating the situation for the already poverty-stricken population. According to UNDP, 97% of Afghans could plunge into poverty by mid-2022, further degenerating the living conditions.
With the prospect of the IMF [International Monetary Fund], the World Bank, and all the bilateral and multilateral financial institutions coming together with the UN to tackle Afghanistan’s economic crisis becoming bleak, the Taliban’s rigorous restrictions are only adding to the problem.
As the Economic Crisis Advance Online shopping services terminate in Afghanistan
The recent development comes after most of the e-commerce sites had already shut down due to Afghanistan’s declining economic state. The last two and also the biggest online services have discontinued citing the economic upheaval in the country as the reason for their collapse.
The economic turmoil in the country has only swelled since the Taliban’s takeover last year. The closing down of these online services is threatening to reverse years of infrastructural developments that the country accomplished.
Afghanistan was in an impoverished state before the Taliban takeover, ranking last in the global happiness index, making it the worst country to inhabit. As the economic crisis heightened, the country’s humanitarian crisis intensified. According to the UN, approximately 19.7 million people are facing a hunger crisis, with 59% of the population in Afghanistan in need of humanitarian aid.
As an acute liquidity crisis curtails the cash flow in the country and GDP growth weakens, the economic crisis in the country is in a dire state, calling for global assistance.
But as the Taliban dismisses the deprived voices reverberating in the country and defy widespread hunger underlying the country’s economic crisis, the people in Afghanistan continue to struggle for a possible future under the oppressive power.