Banjul, Gambia (PANA) - After two years of strong growth of 6.1% in 2019 and 7.2% in 2018, Gambia’s economy has been affected by the global COVID-19 pandemic and is expected to stagnate in 2020 due to trade disruption and the fall in tourism, according to the first World Bank Economic Update for the country released on Thursday.
Declining incomes, rising food prices, and school closures resulting from the health crisis took a toll on the livelihoods of many households.
The economy is expected to gradually rebound in 2021 if the pandemic recedes and the global economy starts to recover.
The report, "Preserving the Gains," notes that overall fiscal deficit was the lowest in a decade pre-COVID, reaching 2.5% of GDP in 2019, but rose in the first half of 2020 to accommodate pandemic-related spending pressures.
On agriculture, the report says favourable rainfall, good access to inputs, and few pest outbreaks have resulted in a strong turnaround in the sector.
Despite the impact of the pandemic on the earnings of Gambians in the diaspora, official remittances grew at record pace in the second quarter of 2020, perhaps due to travel restrictions closing informal channels.
This has positively affected the country’s international reserves, which continued to rise in 2020.
The report says that the global pandemic has put downward pressure on inflation, which had previously been increasing.
“The Gambia's sustained economic expansion in recent years has contributed to reduce poverty rates,” said Feyi Boroffice, World Bank Resident Representative. “However, the recent economic downturn threatens this progress. The government has deployed several initiatives to mitigate the impact of COVID-19 on the most vulnerable households but scaling up its support will be crucial to strengthen resilience.”
The report acknowledges that achieving macroeconomic stability will require improving spending efficiency and increasing tax revenues, as well as strengthening public financial management and governance of state-owned enterprises, combined with better service delivery for crucial infrastructure including energy, water and telecommunications.
The core of Gambia’s growth path and post-COVID economic strategy is creating a skilled labour force that is more productive and better able to adopt and adapt to new technologies.
They highlight the need to increase productivity, partially through infrastructure improvements, in order to create jobs.
The Gambia has a young population with a rapidly growing working-age population, but low labour force participation rates and high unemployment undermine this demographic dividend.
“Future economic growth will depend on a more inclusive jobs agenda. This will mean creating better-paid jobs and reallocating workers to the most productive sectors,” said Mehwish Ashraf, World Bank Country Economist and lead author of the report.
It should also create more opportunities for women and young workers who are currently more at risk of becoming economically and socially excluded.
-0- PANA MSS/MA 18March2021