In south-central Asia stands the mountainous country of Afghanistan, known for its rugged terrain, rich cultural heritage and historic trade routes. The largely traditional and agriculture-based economy is dependent on farming, livestock and small trade. Although the region has significant natural resources, economic activity remains informal and rural, with limited industrial development.

Over the past 20 years, Afghanistan has faced adversity. Changes in leadership and governance caused significant shifts in daily life, with educational and work opportunities for women were greatly reduced, the economy contracted and widespread malnutrition increased as many jobs disappeared as the country adjusted to new governing structures.

Over the past year, the Afghan economy has experienced moderate expansion. In 2024, Afghanistan’s gross domestic product (GDP) grew by 2.5% and is projected to grow by 4.3% in 2025, per the World Bank. In September, its inflation rate fell to 2.1% from 3.1% in the previous month, according to Trading Economics.

Fiscal conditions in Afghanistan are improving with domestic tax revenues expected to rise to 17.1% of GDP in 2025, according to the World Bank’s Afghanistan Development Update. This progress is attributed to stronger enforcement and compliance measures. “However, declining external grants are shrinking the overall fiscal envelope, leaving the country heavily dependent on donor support and trade-related taxation,” reads the report. 

However, Afghanistan’s fast-growing population and weak investment is impeding average income growth. Rising external pressures, fiscal constraints and limited external financing continue to threaten macroeconomic instability, per the World Bank’s Afghanistan Development Update.

The 15% reciprocal tariff from the United States has disrupted Afghanistan’s economic trade ties with the U.S. In November, customers in Afghanistan paid 45 days beyond terms on average, according to FCIB’s Credit and Collections Survey. Of those surveyed doing business with Afghanistan, noticed an increase in payment delays across the board and held strict payment terms, with 68% granting Afghan customers 1-30 days terms and 33% granting 31-60 days. The most common reasons for payment delays are billing disputes, cash flow issues, inability to pay and unwillingness to pay (all at 67%).

Credit professionals are taking proactive measures to mitigate risk with Afghan customers. “Best to avoid credit sales in Afghanistan,” one respondent wrote. “Due to global economy struggling, there is more and more AI fraud,” another respondent wrote. “Do your due diligence and use the five Cs of credit so you may know who you are selling to.”