Economic Impact of Election Chaos?

While it’s difficult to tell exactly what the measure is or how the estimate was made, the Afghan Finance Ministry has suggested that the recent elections have reduced income nationally by 20% (for more see the article here).  This estimate certainly seems high, but it does reflect a lot of the concern that we have heard about how the elections are affecting the country’s economic state.  The longer the counting takes and the more likely a disputed outcome is, the more hesitant Afghans are to invest in their own economy.  Businessmen are looking abroad instead for opportunities in the Gulf and there’s been a slow down of imports since it’s unclear what prices might look like 6 months from now.  The logic for most is that it’s better to wait and see what happens that make any risky economic moves.  The problem, of course, is that the process has put economic decisions on hold for most of the year already.  As a result, a lot of the announcements and accusations made by both the Ghani and Abdullah camp are not just causing political angst, but are actively damaging the economy.  The longer the process takes and the more contentious it is, the more a weak economy continues to stagnate.

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