Food, Energy, and Core Inflation Under Scrutiny as Gambia’s Economy Grows

Central Bank Governor Buah Saidy

By Haddy Ceesay

The Gambia’s economy grew by 5.3 percent in 2024, fuelled by gains in the services and industrial sectors, according to the Central Bank’s latest monetary policy update. However, Governor Buah Saidy warned that persistent core inflation and global trade uncertainties continue to pose significant risks to the country’s economic stability.

Last week, the Central Bank of The Gambia’s Monetary Policy Committee (MPC) held its quarterly press briefing on Thursday, 12th June 2025, to assess key global and domestic economic trends. The session, held at the Bank’s headquarters in Banjul, was led by Governor Buah Saidy, who presented the MPC’s outlook and its implications for monetary policy.

Governor Saidy noted that the global economy continues to recover at a slow and uneven pace, challenged by increasing trade fragmentation, rising debt vulnerabilities, and climate-related supply disruptions. According to the International Monetary Fund (IMF)’s April 2025 World Economic Outlook, global growth is now projected at 2.8 percent—down 0.5 percentage points from earlier forecasts and below the 3.2 percent growth recorded in 2024.

Global inflation is expected to average 4.3 percent in 2025, down from 5.8 percent in 2024, reflecting the effects of tighter monetary policies and easing commodity prices. However, core inflation remains elevated in many advanced economies, driven by robust wage growth and sustained demand in the services sector.

Governor Saidy warned that inflationary risks remain high in emerging and developing economies due to ongoing currency depreciation, commodity price volatility, and climate shocks. He added that global trade is likely to remain subdued, with trade volume growth forecast at just 1.7 percent in 2025, according to IMF projections.

Addressing food prices, Saidy referenced recent figures from the UN Food and Agriculture Organization (FAO), which show the FAO Food Price Index declined by 0.8 percent in May compared to April. The drop was largely due to falling prices in cereals, sugar, and vegetable oils, although increases in dairy and meat prices partially offset those declines. Nonetheless, the index remained 6.0 percent higher than it was a year ago. Notably, the FAO’s Cereal Price Index rose by 1.4 percent in May. For food-importing nations like The Gambia, these fluctuations continue to fuel domestic inflation.

On the domestic front, preliminary data from the Gambia Bureau of Statistics show that real GDP expanded by 5.3 percent in 2024, up from a revised 5.0 percent in 2023. This growth was driven primarily by strong performances in the services and industrial sectors. However, the agriculture sector contracted by 1.1 percent due to inadequate rainfall during the previous rainy season.

The country’s external sector also improved, with the current account deficit narrowing to USD 13.2 million (0.6 percent of GDP) in the first quarter of 2025, down from USD 21.1 million (0.9 percent of GDP) in the fourth quarter of 2024. This positive shift was attributed to increased tourism earnings, steady remittance inflows, and a decline in electricity imports.

Regarding fiscal developments, domestic government debt slightly declined to GMD 45.6 billion (23.4 percent of GDP) in March 2025, compared to GMD 46.4 billion (27.0 percent of GDP) in 2024. Short-term instruments—including Treasury bills and Sukuk Al Salaam bills—comprised 49.2 percent of the domestic debt stock, while medium- and long-term instruments accounted for 33.9 percent and 17.1 percent, respectively.

Reflecting tighter monetary conditions, the average interest rate on Treasury bills rose from 11.3 percent in 2024 to 14.6 percent by March 2025.

On the monetary side, money supply expanded by 11.3 percent year-on-year in March 2025, compared to 9.4 percent during the same period in 2024. The increase was largely driven by growth in net foreign assets within the banking system.

Inflation trends showed mixed signals. Food inflation eased to 8.8 percent in March 2025, mirroring declining global food prices. Non-food inflation also dipped slightly to 7.4 percent, supported by falling international oil prices and reduced transport costs. However, core inflation—which excludes volatile items like food and energy—climbed from 5.7 percent to 6.9 percent, indicating persistent price pressures in housing, utilities, and services.

The Central Bank is expected to announce its next policy rate decision in the coming days, as it weighs the evolving global and domestic economic landscape.