Afghanistan’s economy remains under severe pressure, and households are paying the price as humanitarian aid declines and economic challenges continue. In 2025, around 28 million people — three in four Afghans — were unable to meet their basic subsistence needs, according to the United Nations Development Programme.

Economic Pressures

Dr. Niamatullah Ibrahimi, a research fellow at the University of Melbourne, spoke with The Borgen Project about the economic pressures facing Afghanistan.

Afghanistan’s trade deficit widened to about $11.3 billion in 2025 as imports rose and exports remained stagnant. The UNDP also reports that population growth outpaced economic growth, contributing to falling income per person. Restrictions on women’s rights and employment continue to reduce women’s participation in the economy and weaken the country’s economic potential.

Ibrahimi explained, “The economy naturally contracted. Also there are other kinds of factors which slow investment and combine to drive greater unemployment in Afghanistan.”

Humanitarian Aid and Migration Issues

Afghanistan is already struggling to create enough jobs, and large-scale returns from neighboring countries are adding further pressure. Since September 2023, nearly 5.9 million Afghans have returned from Iran and Pakistan. In 2025 alone, 2.9 million people returned, placing additional strain on jobs, housing, water systems and public services.

Ibrahimi also highlighted this pressure, noting that migration “has increased the number of people, more burdened the government for employment.”

Inflation has added to the strain. By March 2026, inflation had climbed to 7.6%, driven in part by food prices, supply constraints and strong demand.

At the same time, humanitarian assistance has fallen sharply. Humanitarian aid declined by almost 70%, from $3.27 billion in 2022 to $1 billion in 2025. More than halfway through 2026, only $438 million had been secured. Funding shortages have forced hundreds of health facilities to close or reduce services.

Save the Children reported that it had kept 14 clinics open and was the only health care provider serving around 10,000 people in mountainous areas of northern Afghanistan. The funding crisis has also coincided with worsening acute malnutrition among children.

Ibrahimi said of declining aid, “Up until 2022 the UN did a good job, but since then aid has significantly declined. This is affecting everything, like, health, education, food resources maybe. In the distribution, you know, everything from nutrition, clinics that are quite important.”

For many families, prolonged economic insecurity has led to rising debt and difficult coping strategies. The UNDP reports that more than 80% of households are in debt and nearly three-quarters rely on negative coping strategies to get through the day.

Climate conditions make these challenges worse. Drought affected 64% of the country in 2025, while access to adequate drinking water fell to 44%, down from 59% in 2024.

India as a Neighboring Source of Support

Despite difficult relations with the Taliban in the past, India has continued to provide humanitarian assistance to Afghanistan. India has also discussed development projects, water resource management and private-sector investment with Afghan authorities.

On Aug. 20, 2026, India delivered medicines and medical consumables to a government hospital in Kabul, continuing its health and humanitarian support for the Afghan people.

On the engagement of countries such as India, China and Russia, Ibrahimi raised an important question: whether diplomatic relations and aid are for the “survival of the people, or is it for the survival of the regime?”

International assistance is providing some relief, but Afghanistan continues to face widespread poverty, weak job creation, reduced aid and climate pressures. The UNDP has emphasized that humanitarian support must be accompanied by investment in livelihoods, services and local markets if households are to have a stronger chance of rebuilding their economic security.

– Tanay Ashok Sonthalia

Tanay is based in Melbourne, Australia and focuses on Good News for The Borgen Project.

Photo: Pixabay