As confidence resumes following the sharp slowdown in 2016, economic recovery is gaining traction. Real GDP growth was an estimated 5.4% in 2018, up from 3.5% in 2017, driven largely by services— tourism and trade and financial services and insurance— which expanded by 10% in 2018, coupled with robust growth in transport, construction, and telecommunications. In tourism, the number of arrivals was expected to reach 225,000 in 2018 after surpassing its pre-Ebola peak of 171,000 in 2017.

The fiscal deficit narrowed to 3.9% of GDP in 2018 from 7.9% in 2017, thanks to increased fiscal discipline and international community support. However, the debt-to-GDP ratio stood at about 130% of GDP in 2017 and the country has been classified as being in debt distress. Inflation decreased to an estimated 6.2% in 2018 from 8% in 2017. Gross international reserves increased to 3.1 months in 2018 from 2.9 months in 2017, helped by increased financial assistance from development partners

The current account deficit remains large— an estimated 19% of GDP in 2018, down slightly from 2017. For the first half of 2018, total imports rose by 9.2% compared with the first half of 2017, while total exports increased by 8.5% to $54.9 million. The export basket contains mainly primary commodities, including groundnuts (55.6%), fish and fishery products (21.6%), and cashew nuts (10.6%). Short-term economic prospects are expected to steadily improve over the medium term. Real GDP is projected to grow by 5.4% in 2019 and by 5.2% in 2020.

Insecurity and political instability pose risks in 2019 with the withdrawal of the Economic Community of West African States mission and possible contention over the three-year presidential term limit. In addition, high public debt will continue to crowd out government spending in key socioeconomic sectors such as health, education, and infrastructure development unless the government restructures its debt.

Other headwinds likely to affect the economic outlook include a resurgence of political instability, the large increase in public spending, and delays in implementing structural reforms, and adverse weather that could weaken rain-fed agriculture.

The budget deficit remains a challenge for policymakers, and fiscal consolidation is a key pillar in the National Development Plan 2018–21, which garnered $1.7 billion in commitments from donors at a May 2018 conference in Brussels. Disciplined implementation of the reform agenda for state-owned enterprises, lower domestic borrowing, and greater commitment to administrative austerity measures could help reduce the deficit. Overall, policies must focus on enhancing efficiency in service delivery using limited government resources.

Addressing energy and water shortages remains a vital policy priority. Access to electricity is 47% nationally but only 13% in outlying provinces. Only 60 MW of the 106 MW of total installed capacity are available, with transmission and distribution network losses reaching 26% in 2016. Unreliable electricity supply also affects availability of water in Greater Banjul, compounding the problem of limited access to piped water.