Macroeconomic performance
With confidence returning after the sharp slowdown in 2016, the economic recovery is being confirmed with a real GDP growth rate of 5.4% in 2018, higher than the 3.5% in 2017. Growth is mainly driven by services - tourism, business and financial services and insurance - which grew by 10% in 2018, coupled with solid growth in the transport, construction and telecommunications sectors. In tourism, 225,000 visitors were expected in 2018, following 2017's record of 171,000, which exceeded pre-Ebola figures.
In 2018, the budget deficit was close to 3.9% of GDP, compared with 7.9% in 2017, thanks to improved fiscal discipline and support from the international community. However, the public debt ratio was around 130% of GDP in 2017, and the country is classified as over-indebted. In 2018, inflation fell to 6.2% from 8% in 2017. Gross international reserves rose to 3.1 months in 2018 from 2.9 months in 2017, thanks to greater financial support from development partners.

The current account deficit remains high at around 19% of GDP in 2018, down slightly on 2017. During the first half of 2018, total imports increased by 9.2% compared to the first half of 2017, while total exports increased by 8.5% to USD 54.9 million. Exports consist mainly of commodities, including groundnuts (55.6%), fish and fishery products (21.6%) and cashew nuts (10.6%). The short-term economic outlook is expected to improve gradually over the medium term. Real GDP is expected to grow by 5.4% in 2019 and 5.2% in 2020.

Outlook: positive and negative factors
Insecurity and political instability pose risks for 2019, with the withdrawal of the Economic Community of West African States mission and possible conflicts linked to the three-year presidential term limit. In addition, high public debt will continue to put a strain on government spending in key socio-economic sectors such as health, education and infrastructure development, unless the country restructures its debt.

Other difficulties are likely to threaten the economic outlook, such as the resurgence of political instability, the sharp increase in public spending, delays in implementing structural reforms, and the dependence on rain-dependent agriculture threatened by adverse weather conditions.

The budget deficit remains an issue for policymakers, so fiscal consolidation is a key strategic focus of the 2018-2021 National Development Plan, which garnered USD 1.7 billion in donor commitments at a May 2018 conference in Brussels. Disciplined implementation of the SOE reform programme, lower domestic borrowing and a stronger commitment to administrative austerity measures would reduce the deficit. Overall, policies should focus on improving the efficiency of service provision using limited state resources.

Solving the problems of electricity and water shortages remains a key political priority. Access to electricity is 47% nationally, but only 13% in remote provinces. Only 60 MW of the total 106 MW installed capacity is available, and in 2016 transmission and distribution network losses reached 26%. The unreliability of the electricity supply also has an impact on the availability of water in Greater Banjul, exacerbating the problem of limited access to running water.

Source: African Economic Outlook (AEO) 2019