Macroeconomic and Developmental Indicators
Gambia Economic Outlook
The Gambia is one of the smallest terrains in mainland Africa with a total area of 11,300 km2 and, by distance, the second smallest country in the ECOWAS region after Cabo Verde. In addition to its relatively small size, The Gambia is also among the poorest countries in the ECOWAS region. According to the most recent poverty survey, 48% of the population is considered poor (below the national poverty line), of which 70% are in rural areas. Unemployment is also pervasive. Only five out of ten working-age Gambians (15-64 years old) are employed, and about 62% of youths are considered unemployed. The level of inequality is relatively high with a Gini coefficient of 0.356 in 2015, above the median level for the region.
The economic environment improved markedly in 2019 despite the significant fall in tourist arrivals due to the closure of a major travel agency—Thomas Cook (UK). Real GDP is estimated to have reached 6.5% in 2019, from 1.9% in 2016 and 4.8% in 2017. The strong growth performance reflected an increase in private and consumer spending, and improved supply-side factors. Inflation continued its downward trend compared to 2017, decreasing to 6.5% in 2018 and 6.9% in 2019, in line with the Central Bank target of 5%. The medium-term growth prospect is expected to be positively underpinned by strong macroeconomic policies, improved business competitiveness, and sustained foreign exchange buffers.
The overall fiscal deficit is estimated to have declined significantly from 6.2% in 2018 to 3.4% in 2019 due to strong domestic revenue growth, lower expenditures, and improved debt management. Public debt- to-GDP ratio is estimated at 80.9%, declining by 5.3 percentage points from its level in 2018. The slight improvement was on the back of the implementation of prudent fiscal policies to contain rising debt levels. According to the IMF debt sustainability report, the Gambia is still classified as a high risk of distress. The current account deficit is estimated to have declined from 9.7% of GDP in 2018 to 9.4% of GDP in 2019.
The business environment is improving albeit at a slow space. It is ranked 155 out of 190 countries by the World Bank Doing Business Survey 2020. Key challenges include access to getting credit, protecting minority investors, higher taxes, and electricity supply.
In 2019, The Gambia impressively met all four of the primary convergence criteria of the WAMZ (Central Bank financing of fiscal deficit as % of the previous year, inflation, and gross external reserves) and satisfied only one out of two secondary criteria (except for public debt-to-GDP ratio which was high).