The Gambia’s economic activity increased in 2023 amid continued global challenges. Real GDP increased by 5.3% in 2023 (2.7% in per capita terms), from 4.9% (2.4% in per capita terms) in 2022. On the supply side, growth was mainly supported by improved agricultural and industrial production. The increase in agricultural growth was primarily attributed to a good rainy season and improved agricultural practices with the use of improved seeds and increased fertilizer subsidies, alongside an increase in investment in projects by international partners.
The fiscal deficit decreased while remaining high in 2023 as increased tax collection and higher levels of grants failed to fully offset the rising expenditure. Supported by continued economic recovery and the implementation of revenue boosting measures, total revenue increased from 17.7% of GDP in 2022 to 20.6% of GDP in 2023. Tax revenue rose by 0.5 ppts of GDP in 2023 thanks to new administrative measures and strengthened collection efforts.
Economic outlook
The macroeconomic outlook foresees consolidation of the recovery in the medium term supported by the implementation of the Recovery-Focused National Development Plan (RF-NDP) 2023–2027 but it hinges on a continuous commitment to macro-fiscal stability. Real GDP growth is projected to strengthen to around 5.6% in 2024–26 (3.2 in% per capita terms), driven by increased activity across the economy. Agriculture is expected to continue to grow, assuming favorable rainfall alongside with an efficient use of fertilizers, continued seeds improvements and support from development partners. Industry growth will be boosted by ongoing large infrastructure projects, sustained public and private construction, and improvements in the business environment. Services are expected to continue to grow assuming higher tourist arrivals as global economic recovery and trade resume while regional and global geopolitical tensions tame.
Jumpstarting inclusive and sustained growth
From the long-term perspective, the pace of economic growth has been declining and volatile since independence. From an average of 5.7% over 1968–1978, the average Real GDP growth gradually fell to 3.0% over 1979–2016 (Figure 1), due to the occurrence of climate events such as droughts, limited accumulation of capital (human and physic), reliance on low value-added tourism, weak governance and weak economic mismanagement and investment climate combined with poor infrastructure, which resulted in declining enterprises’ (SOEs) contingent liabilities, continued rise in the government’s credit cost, weaker than expected grants, end-of-debt service deferrals in 2024, and other external price shocks.
To promote sustained and inclusive growth, the authorities will need to transform the growth model from reliance on low value-added tourism to a dynamic private sector that offers more economic opportunities to all Gambians, especially the youths. To this end, they will need to implement policies that aim to strengthen macroeconomic stabilization and fast-tracking structural reforms needed to support productivity and initiate transformative structural change.
******
The Economic Update monitors significant recent economic developments in the country, it reflects a mix of steady growth and persistent challenges, highlighting the key structural challenges The Gambia faces whilst highlighting its sluggish progress in its pursuit of inclusive and sustained growth. This 2024 edition – Jumpstarting inclusive and sustained growth - presents a comprehensive overview of the state of the economy, recovery in the Tourism sector, and provides policy options for laying the foundation for higher and more inclusive growth. Download the report here.