The economy of Afghanistan has improved significantly since 2002 due to the infusion of multi-billion US dollars in international assistance and investments, as well as remittances from expats. It is also due to dramatic improvements in agricultural production and the end of a four-year drought in most of the country. However, Afghanistan still remains poor for now and highly dependent on foreign aid.
About half the population suffer from shortages of housing, clean drinking water, electricity and employment. The Afghan government and international donors have remained committed to improving access to these basic necessities by prioritizing infrastructure development, education, housing development, jobs programs, medical care, and economic reform over the recent years. The replacement of the opium trade - which probably makes up about one-third of the country's GDP - is one of several potential spoilers for the economy over the long term.
The current trade between Afghanistan and other countries is at US$5 billion a year. In 1996, legal exports (excluding opium) were estimated at $80 million and imports estimated at $150 million per year. Since the collapse of the Taliban government in 2001, new trade relations are emerging with the United States, Pakistan, Iran, Turkmenistan, the EU, Japan, Uzbekistan, India and other countries. Trade between Afghanistan and the U.S. is beginning to grow at a fast pace, reaching up to approximately $500 million per year. The Afghan handwooven rugs are one of the most popular products exported from the country. Other products include hand crafted antique replicas, precious and semi-precious stones as well as leather and furs.
Afghanistan is endowed with a wealth of natural resources, including extensive deposits of natural gas, petroleum, coal, marble, gold, copper, chromite, talc, barites, sulfur, lead, zinc, iron ore, salt, precious and semi-precious stones. In 2006, the U.S. Geological Survey estimated that Afghanistan has as much as 36 trillion cubic feet (1.0×10^12 m3) of natural gas, 3.6 billion barrels (570×10^6 m3) of oil and condensate reserves. According to a recent 2007 U.S. Geological Survey's assessment, it was again revealed that Afghanistan has significant amounts of undiscovered non-fuel mineral resources. Scientists also found indications of abundant deposits of colored stones and gemstones, including emerald, ruby, sapphire, garnet, lapis, kunzite, spinel, tourmaline and peridot.
In May 2008, Afghanistan signed a contract with China for a project that deals with extracting copper. According to official sources, the project involves an investment of $2.8 billion dollars and an annual income of $400 million dollars to the Afghan government as well as 20,000 of its citizens provided with labor. The country's Ainak copper mine, located in Logar province, is one of the biggest in the world. According to some reports, it is estimated to hold at least 11 million tonnes or 33 billion US dollars worth of copper
The nation's other most important resource has been natural gas, which was first tapped in 1967. During the 1980s, natural gas sales accounted for $300 million a year in export revenues (56% of the total). Ninety percent of these exports went to the Soviet Union to pay for imports and debts. However, during the withdrawal of Soviet troops in 1989, Afghanistan's natural gas fields were capped to prevent sabotage by the Mujahideen. Restoration of gas production has been hampered by internal strife and the disruption of traditional trading relationships following the collapse of the Soviet Union. Gas production has dropped from a high of 8.2 million cubic metres (2.9 × 108 cu ft) per day in the 1980s to a low of about 600 thousand cubic metres (2.2 × 107 cu ft) in 2001. After the formation of the new government under Hamid Karzai, production of natural gas is planned to be restored again. A locally owned company by the name of Azizi Hotak General Trading Group (Azizi Hotak)
is currently the main supplier
of diesel fuel, gasoline, jet
fuel and LPG in Afghanistan.
Trade in goods smuggled into Pakistan once constituted a major source of revenue for Afghanistan. Many of the goods that were smuggled into Pakistan have originally entered Afghanistan from Pakistan, where they fell under the Afghan Trade and Transit Agreement (ATTA). This permitted goods bound for Afghanistan to transit through Pakistan free of duty. This resulted in considerable problems for the Pakistani government, particularly its customs bureau who realized that many of the items being resold on the black market in Pakistan were the very same items being allowed duty free exemption from Pakistani ports (notable Karachi) on their way to Afghanistan. When Pakistan clamped down in 2000 on the types of goods permitted duty-free transit, and introducing stringent measures and labels to prevent such practices, re-routing of goods through Iran from the Persian Gulf increased significantly. The pre-2000 smuggling trade provided undocumented jobs to tens of thousands of Afghans, but also helped fuel the black economy, often intertwinned with the drug cartels, of both countries
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Economy Of Afghanistan