Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of intermediate goods purchased. GDP at market prices (nominal GDP) measures the value of total production at the present price level.
Adam Smith a renowned economist says “Economic growth determines a countries future, and economic growth in the past determines a countries present as far as its material values are concerned.” So every material value of the modern world is a result economic growth in the past, or your standard of living is the result of economic growth in the past. Economic growth in the future will determine whether or not there is rising or falling economic wealth, and coordinated with that whether or not the standard of living in the future continues to rise or fall.
The World Bank in its former report “South Asia Economic Focus” forecasted that economic growth would rise to 5.8 percent in 2015 from 5.2 percent this year and 4.8 percent last year. Conversely it added the Afghanistan’s economic growth fell dramatically in 2013, to an estimated 3.6 percent of GDP from 14.4 percent in 2012, as heightened uncertainty about political and security transition led to a fall in investor and consumer confidence. The economic decline observed was due to steep decline in agro-products and mining output.
The hazy politico-economic situation eroded the confidence of old investors and restricted new investments, consequently Afghanistan suffered economic degeneration and financial losses. The report read, number of new firm registrations fell sharply in 2013 to its lowest level in five years, with a reduction in both local and foreign new fixed investments.
The primary reasons behind these all financial losses the delayed fate of BSA not inked by outgoing president. Many investors fearing escalated insecurity suspended their economic activities and avoided making new investments. This tally with report publicized by WB warning growth is projected to remain weak in 2014. However, the rate of growth to boost relies to smooth and peaceful political and security transition subsequent to announcement of result.