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Country risk of Gambia : Economy

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Gambia was showing strong macroeconomic performance before the Covid-19 pandemic plunged the country into recession. From a contraction of -0.2% in 2020, economic growth then rebounded to 4.9% in 2021, and it is expected to further accelerate to 6% in 2022 and 6.5% in 2023 (IMF). The third wave of the pandemic in mid-2021 has hampered a vigorous rebound, but the intensification of the Covid-19 vaccination campaign and the full resumption of activity should support growth in 2022-2023.

The pandemic disrupted some of the progress recently made by the Gambia and increased socio-economic fragility (IMF). After implementing support measures and launching a vaccination campaign, the authorities focused on reinforcing domestic revenue mobilization, furthering fiscal discipline, and improving public spending efficiency and transparency (IMF). According to IMF estimates, the overall fiscal deficit (including grants) increased from 2.2% GDP in 2020 to 4% GDP in 2021, and is forecast to decrease to 3% in 2022 and 1.2% GDP in 2023. While declining, public debt remained high at 82.3% GDP in 2021 (down from 83.5% GDP in 2020), and is expected to narrow to 79.1% GDP in 2022 and 73.8% GDP in 2023 (IMF). Inflation accelerated from 5.9% in 2020 to 7% in 2021, and is expected to ease to 6.3% in 2022 and 6.1% in 2023 (IMF). It should decline to the central bank’s target of 5% in the medium term (IMF). In March 2020, the IMF approved a 39-month Extended Credit Facility (ECF) arrangement to help the Gambia address the challenges from the pandemic, support inclusive growth, reduce debt vulnerabilities, and advance structural reforms. The FY 2022 budget includes fiscal consolidation measures to reduce debt vulnerabilities while continuing to allocate resources to priority expenditures including pandemic mitigation, social spending, and accelerating the post-pandemic recovery (IMF).

The Gambia has a young population with a fast growing working age population, yet low labour force participation rates and high unemployment undermine this demographic distribution. In addition, there are major geographical and gender differences. Almost two-thirds of all employed workers are male, and while 43% of the working age population lives in rural areas, only 35% of employment is located there (World Bank). More than 60% of the population lives in poverty, according to UNDP, and nearly 30% of the active population is unemployed (especially the youth which makes up 39% of this category). According to World Bank, unemployment rate in the country was estimated around 11.1% in 2020, due to the negative economic impact of the Covid-19 pandemic. On the UNDP’s HDI rankings, Gambia was 172th out of 189 countries in 2020.

 

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

 
 
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Latest Update: October 2022