#Article (Archive)

Central Bank forecasts 5.5% GDP growth

Aug 1, 2011, 12:08 PM | Article By: Bakary Samateh

Real Gross Domestic Product growth is projected at 5.5 percent premised on gradual recovery of the country’s tourism sector and agriculture, a press release from the Monetary Policy Committee of the Central Bank of The Gambia has said.

The release, issued Friday at a press conference held at the Central Bank in Banjul, said money supply growth decelerated to 13.4 percent in the year to end-June 2011, significantly lower than 21.0 percent a year ago.

The Monetary Policy Committee said revised estimates from the Gambia Bureau of Statistics indicate that real GDP growth was 6.1 percent in 2010 compared to 6.3 percent in 2009. The slowdown, it said, was attributed mainly to the decrease in value-added of agriculture and services, particularly tourism and wholesale and retail trade.

According to the Committee, government fiscal operations in the first half of 2011 showed an improved position compared to the same period last year.

“Preliminary data indicate that total revenue and grants amounted to D2.79 billion compared to D2.55 billion in the corresponding period in 2010. Domestic revenue, which comprises tax and non-tax revenue, rose to D2.17 billion, or 2.9 percent,” it said, adding that total expenditure and net lending, on the other hand, decreased to D2.88 billion, or 2.6 percent.

The CBG Monetary Policy Committee said further that the overall budget balance (including grants) on commitment basis, was a deficit of D90 million compared to a deficit of D403.9 million in the first half of 2010. Excluding grants, it added, the deficit was D708.5 million.

“Reflecting the impact of the global economic crisis on the services sector, particularly tourism, volume of transactions, measured by aggregate sales and purchases of foreign currency in the domestic market, contracted to US$1.58 billion in the year to end-June 2011 from US$1.65 billion a year ago,” the statement added.

It said owing mainly to reduced foreign currency inflows and increased demand, the Dalasi depreciated in nominal exchange rate terms by 8 percent in June 2011 compared to a depreciation of 1.9 percent in June 2010.

“Against individual currencies, the domestic currency depreciated by 4.9 percent against the US Dollar, Pound Sterling (8.40 percent), Euro (12.97 percent) and CFA (7.56 percent),” it stated.

The Monetary Committee further stated that according to the key financial soundness indicators, the banking industry remains sound as capital and reserves increased to D2.6 billion in June 2011 compared to D1.6 billion in June 2010.

It said that latest readings from the private sector business sentiment survey indicate that the majority of respondents reported higher economic and business activity in the second quarter of 2011 compared to the preceding quarter. However, it went on, the majority of respondents indicated that current prices are higher and expect inflation to be elevated in the third quarter.

The Committee further indicated that inflation is projected to remain within the target of 6 percent for the remainder of 2011 consistent with the deceleration in the growth of the key monetary aggregates.

However, it went further, acceleration in food and energy prices, as well as higher-than-expected fiscal deficit are risks to the outlook.