Gambia is on a steady path to economic recovery following a challenging political transition, the impact of the Covid-19 pandemic, and the indirect effects of the Russian invasion of Ukraine. Despite concerns over reduced foreign aid and geopolitical tensions, the country’s medium- to long-term political risk classification remains optimistic.
Economic growth is projected to reach 5.9% in 2025 and 5% in 2026, supported by a resurgence in tourism and the implementation of the National Development Plan (2023–2027). Inflation is expected to decline to 8.8% this year and stabilize at around 5% in 2026, assuming continued monetary policy measures and stable global food and energy prices.
Gambia’s current account deficit is anticipated to narrow due to rising tourism revenues and remittances, while foreign direct investment is expected to increase. The foreign exchange market has recovered significantly from past liquidity challenges, with foreign reserves covering 4.5 months of imports by the end of 2024. The Gambian dalasi depreciated by 7% against the US dollar in 2024, a manageable decline.
The country’s economic recovery gained momentum after 2023, following years of financial strain due to the pandemic. Public finances have shown significant improvement, supported by increased government revenues and fiscal reforms. The current IMF program (2024–2027) has facilitated foreign investment and financial stability, although challenges remain.
Gambia’s dependence on foreign aid poses a potential risk, especially as global donors, including the U.S., reduce their support in favor of increased defense spending. Political uncertainty also looms, with President Adama Barrow facing declining popularity during his second term. A potential bid for a third term in the 2026 elections could trigger opposition and civil unrest, particularly amid concerns over rising living costs and electricity shortages affecting businesses.
Despite these risks, Gambia remains classified as a stable short-term political risk and holds a positive outlook for medium- to long-term improvements.
