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There are no signs of meaningful improvement in the political and security situation, with the government weak and divided, latest peace talks in Moscow foundering, and the Taliban gaining ground assisted by attempts by Russia and Iran to undermine the US and Nato. Indeed, the dropping of the 'mother of all bombs' by the US on IS insurgent targets in Nangarhar province earlier this month suggests the war could intensify. Despite this worrying backdrop and a surge in inbound refugees, economic growth is forecast at 2.5% this year thanks to rising agricultural production, but has slowed sharply from earlier years due to the poor security climate, troop withdrawals and lower infrastructure spending.
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Q2 GDP data were much stronger than expected, with the economy growing 1.2% on the quarter after an upwardly-revised 0.7% in Q1. Domestically, both consumption and investment were key drivers. Low interest ...