June 2022




Key Messages
Recent Developments
The Gambia performed better in 2020 compared to many of its peers but its
recovery in 2021 was more gradual.




Growth has been driven by remittance-financed private construction, public
infrastructure projects, and reviving tourist arrivals…
…but in the agriculture sector, crop production has been mixed, demonstrating its
vulnerability to weather shocks.
                                         8.6




Merchandise imports grew, reflecting consumption and investment growth, while
merchandise exports recovered.


                             18.2                                             4.6
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Remittances reached a record 22.6 percent of GDP in 2021, covering three-fourths
of the trade deficit…

…but o cial transfers fell to almost one-fifth of their level in 2020 as pandemic
related donor support was phased out.

As a result, the current account deficit widened…

                                    -3.2
…which was o set by capital and FDI inflows, boosting foreign reserves and
contributing to a stable exchange rate.
                                                                     52.6




Inflation has begun to pick up again after cooling in 2020, primarily driven
by surging food prices.




                                                            7.4




Private sector credit rebounded strongly, especially in construction and distributive
trade sectors.




           Distributive trade




                Construction
The fiscal deficit more than doubled as the Government sought to kickstart the economy
and invest in its physical infrastructure.

                                  1.0


                                        -2.2




Locally financed capital expenditure reached a record level but recurrent expenditure
declined as pandemic-related spending was phased out.




… while revenue performed modestly, largely due to delayed economic recovery,
and grants fell drastically.
Public debt has declined and the maturity profile of domestic debt has slightly improved.



                                                              83.8




Lockdown measures initially caused widespread job losses and high levels of
food insecurity but pandemic-related support measures have helped support the poorest
households and poverty levels are estimated to have fallen in 2021.
Outlook and Upcoming
     Challenges
The outlook is dampened by global contagion from the war in Ukraine. Although
direct investment, tourism, and trade links with Russia and Ukraine are limited, The
Gambia is a net importer of food, fertilizer, and fuel.

As a result, GDP growth is estimated to decelerate to 5.6 percent in 2022, compared
to a pre-crisis forecast of 6.2 percent.

Growth is expected to be modest over the medium term, conditional upon a global
economic recovery, political stability, renewed focus on policy implementation, and
normal weather conditions.

Inflation is expected to stay high in the medium term, eroding household incomes,
as global supply disruptions and high commodity prices continue. This calls for
cautious monetary policy tightening.

The current account deficit is also forecast to remain high, reflecting import-intensive
public investment projects.

Key external financing sources will be FDI and capital transfers.

The fiscal deficit is expected to rise in 2021 as the Government responds to challenges
caused by the war, delaying the envisaged fiscal consolidation, but will decline over the
medium-term, reducing the public debt-to-GDP ratio and maintaining debt
sustainability.




                Percent change unless stated otherwise
The outlook is clouded by risks related to:

- new COVID-19 variants

- the war in Ukraine

- erratic weather

- lack of fiscal reform, and of solid institutional and governance structures


However, successful elections have diminished political risks.




Unlocking the country's growth potential will take:
‒ Strengthening governance and institutional structures.


‒ Building fiscal resilience to respond to future shocks: widen its tax base and reduce
its debt burden.


‒ Addressing binding constraints: low and misplaced investment, low productivity
growth, and a lack of diversification.


‒ Formulating evidence-led policies to reverse the potential scarring from the pandemic,
especially the losses in human capital, and improving public service delivery.
     Special Section:
Data for Better Human Capital
Supporting human capital accumulation will require the use of data—and, more importantly,
its reuse in three priority areas—to ensure the best use of scarce fiscal resources:


             Social Protection
             The pandemic highlighted shortcomings in data collection which made it di cult
             to target support for the households that needed it most.

             Education
             E orts to improve data collection systems have started to pay o ...

             … but data gaps are still making it hard to address poor student outcomes.

             Health
             Better integrated data systems are already underlining the importance of
             primary health care.

             Digitization and further integration with wider data sources will be key
             to realizing the country's ambition to provide universal health coverage.




Sources: MOFEA, CBG, GBoS, GRA, HFPS, WEO, World Bank and IMF sta calculations and estimates
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Fajara, The Gambia
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