May 24, 2024
The Gambia’s economy has showcased an unparalleled determination in the realm of increased global and regional uncertainties, according to The Gambia’s Fourth Economic Update – Spring 2024. The country’s real GDP grew by 5.3% in 2023 despite a stagnant global environment, indicating a continued recovery from the COVID-19 pandemic and persistent external headwinds.
“We are pleased to see the Gambia’s economic activity improved”, said Feyi Boroffice, World Bank Resident Representative. “The improved agricultural production and increased public consumption as well as private and public investment drove this positive growth. However, challenges such as higher inflation, monetary tightening and economic slowdown in advanced economies disrupted the tertiary sectors and slowed private consumption, all of which tempered the country’s overall performance”.
The price of commodities increased globally in 2023, causing inflation to rise to even higher levels than in previous decades. In response, the Central Bank of The Gambia tightened monetary policy even further to reroute inflation, increasing the policy rate to17% in December 2023 from 13% in the previous year.
Going forward, The Gambia’s economy is expected to grow by 5.6% in GDP between 2024 and 2026, which is a positive sign. Increased economic activity across the board will fuel growth, but maintaining macro-fiscal stability will be essential. On the other hand, the country’s economic prospects are negatively impacted by protracted regional and international geopolitical tensions, debt vulnerabilities, resurfacing FX pressures, extreme weather occurrences, budgetary slippage, and ongoing financial tightening.
From the long-term perspective, the pace of economic growth has been declining and volatile since independence, due to the occurrence of droughts, economic mismanagement, and weak governance, combined with poor infrastructure and other structural constraints, all of which resulted in negative long-term productivity growth.
Thanks to relative advancements in macroeconomic and fiscal stability and management, The Gambia saw robust growth and high productivity development following its democratic transition in 2017. There are still significant gaps in access to basic services, and poverty and inequality are pervasive. In addition, there are notable gender gaps in The Gambia’s labor market due to high informal employment, low labor force participation, and severe underutilization. The economy of The Gambia is beset by structural change, even if productivity increased during the country’s democratic transition.
“While the economic recovery in The Gambia is encouraging, structural barriers impeding faster growth must be addressed,” noted Ephrem Niyongabo, the report’s author and World Bank economist for The Gambia. “It is crucial for the government to implement policies that enhance transformative structural changes, needed to sustain productivity and productivity and support the country’s inclusive economic growth agenda.”
(Source: The World Bank)
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