Third Gambia economic update: accelerating financial inclusion to unleash the Gambia’s growth potential

The Gambia’s economy continued to recover in 2022, albeit at a subdued pace in a sluggish global economic environment. Real GDP increased by 4.3 percent (1.8 percent in per capita terms) in 2022, unchanged from 2021, when economic growth was recovering from the COVID-19 pandemic following a sharp deceleration to 0.6 percent in 2020. On the supply side, growth was supported by improved agricultural production, which benefited from a relatively rainy season. A deceleration of growth in industry and subdued growth in the services sector explain The Gambia’s weak growth performance. Rising world commodity prices and trade disruptions weighed on the economy, as the country is a net importer of oil and food commodities and has experienced negative terms of trade. Growth in industry was affected by rising prices and limited availability of manufacturing and construction inputs. Weak growth in services was linked to a weaker-than-expected recovery in tourism, which, although the number of arrivals increased, was not sufficient to offset weak growth in other subsectors. On the demand side, growth was driven by increased public consumption and infrastructure investment, while private consumption slowed, and exports contracted. Economic growth was 1.3 percentage points (ppts) below initial projections, owing to the spillover effects of Russia’s invasion of Ukraine.