Banjul, (June 6th, 2023) – The Gambia’s economy has displayed remarkable resilience in the face of global economic challenges, according to the Third Gambia Economic Update. Despite a sluggish global environment, the country’s real GDP grew by 4.3 percent in 2022, signaling a continued recovery from the impact of the COVID-19 pandemic.
“We are pleased to see The Gambia’s economy on a path of recovery, albeit at a subdued pace,” said Feyi Boroffice, World Bank Resident Representative. “The improved agricultural production and increased public consumption and infrastructure investment have contributed to this positive growth. However, challenges such as rising commodity prices and limited availability of manufacturing inputs have tempered the country’s overall performance.”
The report highlights that the weak growth in the services sector, particularly in tourism, has restrained The Gambia’s economic progress. Although there was an increase in the number of tourist arrivals, it was not sufficient to offset the sluggish growth in other subsectors. Furthermore, trade disruptions and negative terms of trade have weighed on the economy, as the country is a net oil and commodity (food) importer and recorded negative terms of trade in 2022.
Inflation has been a concern for the country, reaching decade highs in 2022, mainly due to shocks in global commodity prices. The Central Bank of The Gambia has responded by tightening monetary policy to curb inflation, raising the policy rate by 1 percentage point in May, September, December 2022 to 13 percent.
The modest growth in per capita income has not been sufficient to make a significant impact on poverty reduction. Poverty is estimated to have increased, largely due to weaker growth in per capita GDP and higher food prices, further eroding the purchasing power of households.
Looking ahead, the economic outlook for The Gambia remains favorable, with GDP projected to grow by 5.5 percent over the period of 2023-2025. Growth will be supported by increased economic activity across sectors, particularly in industry and services. However, risks such as a prolonged war in Ukraine, fiscal slippages, climate change, and political uncertainty pose downside risks to the country’s economic prospects, exacerbating existing structural constraints to the economy.
While financial inclusion is key in stimulating economic growth, it is overall low in The Gambia.About 69 percent of adults (15 years and older) do not have access to a transaction account. Constraints to financial inclusion are various and stem both from the demand and the supply side. Low financial inclusion creates a tough environment for Gambian households and small and medium enterprises (SMEs) to realize their growth potential, prosper, and create good jobs.
“The Gambia’s economic recovery is encouraging, but there is need to address structural constraints hampering the economy, as well as the risks that lie ahead,” emphasized Ephrem Niyongabo, World Bank Economist and Author of report. “It is crucial for the government to implement policies that accelerate financial inclusion, which will enhance access to financial services and support the country’s economic growth.”
The World Bank stands ready to continue supporting The Gambia in its efforts to strengthen the economy, reduce poverty, and achieve sustainable development.