African Economic Outlook - Gambia

Economic growth decelerated from 6.3% in 2010 to an estimated 5.5% in 2011 and is expected to stabilise around 5.6% in 2012 and 2013. Since late 2008, economic growth in The Gambia has been mainly driven by good performance in the agricultural sector. Nonetheless, poor w eather conditions, w hich harmed crop production in 2011, and the global crisis in recent years have affected projected GDP growth negatively in the country. Reforms implemented by the government in agriculture, however, will continue to boost the economy and sustain its growth. Inflation accelerated from 3.9% in 2010 to an estimated 4.7% in 2011. This was due to the rise in food and energy prices as The Gambia imports 50% of its food requirements and the Gambian currency, the dalasi, slightly depreciated against all major currencies over this period. Inflation is projected to rise slightly to 4.8% and 5.0% in 2012 and 2013, respectively, in line with the monetary-policy target of 5.0%. The budget deficit fell from 5.4% of GDP in 2010 to an estimated 4.2% in 2011 as a result of the restrictive fiscal policy, and it is expected to fall again to 3.8% and 2.8% in 2012 and 2013, respectively. The current-account deficit widened slightly from 17.0% of GDP in 2010 to an estimated 17.5% in 2011 owing to a rise in the trade deficit, but it is projected to decrease slightly to 16.9% and to 16.4% in 2012 and 2013, respectively, as imports are expected to decrease. The Gambia is facing the challenge of a heavy debt burden estimated at 55.6% of GDP for 2011 and has taken actions to control public spending and to curb new domestic borrowing at close to zero in 2014 and beyond. External borrowing has also been restricted in line with the government’s efforts to set up reforms of tax policy, revenue administration and public financial management. This in turn has contributed to lower inflation and a drop in Treasury-bill yields in 2011. Youth unemployment is a major challenge in The Gambia and is estimated at over 40%. Several programmes such as the Gambia Priority Employment Programme (GAMJOBS) 2007-11 and the National Employment Policy 2010-14 have been implemented to promote the creation of employment opportunities for the young. The new Programme for Accelerated Growth and Employment (PAGE) that will be implemented in 2012-15 also aims to reduce poverty and unemployment.