By: Ismail Manjang
Hon. Buah Saidy, Governor Central Bank of The Gambia has stated that the global economic outlook remains uncertain, despite signs of gradual recovery this year.
He said consumer demand has held up in advanced economies and China to sustain global activity growth, but persistent and new headwinds continue to weigh on the recovery.
He made the statement at the Central Monetary Policy Committee (MPC) briefing of commercial bank managers and journalists on Wednesday in Banjul
“In addition to the adverse effects of the existing shocks, the financial stress in advanced economies, triggered by high-interest rates, has emerged as a major risk to financial stability and growth. Given this, the International Monetary Fund (IMF) in its April 2023 World Economic Outlook (WEO) downgraded its global growth forecast by 0.1 percentage points to 2.8 percent for 2023,” he said.
According to him, global headline inflation continues to decelerate, reflecting declining fuel and energy prices and the impact of monetary tightening.
However, Governor Saidy said the underlying inflationary pressures remain strong, with core inflation in many countries still well above the pre-pandemic levels.
He added that this notwithstanding, the IMF forecast global inflation to decelerate from 8.7 percent in 2022 to 7.0 percent in 2023, before slowing further to 4.9 percent in 2024.
“International commodity prices picked up in April, reflecting strong demand, uncertainties surrounding the extension of the black sea grain initiative, softer supply conditions for some commodities due to adverse weather conditions, and rising input costs.
From March to April 2023, the IMF Average Crude Oil Price Index increased by 5.6 percent mainly on account of OPEC’s decision to cut production and higher demand in China. During the same period, the Food and Agriculture Organization (FAO) Food Price Index, which tracks monthly changes in the international prices of commonly traded food commodities, inched up by 0.6 percent, following twelve consecutive monthly declines,” Governor Saidy underlined.
He also said similarly, the FAO Rice Price Index rose to 124.2 points, up by 2.4 percent from March to April 2023, and 17.6 percent higher than the level in April 2022.
He pointed out that the recovery momentum of the Gambian economy continued in 2022, despite headwinds adding that recent data released by the Gambia Bureau of Statistics (GBoS) indicates that the Gambian economy grew by 4.9 percent in 2022, compared to the revised growth of 5.3 percent in 2021.
He disclosed that 2023 the outlook remains positive and the Central Bank Composite Index of Economic Activity (CIEA) indicated that economic activity was robust in the first quarter of 2023, supported by strong private demand, stable remittance inflows, a gradual recovery in tourism, and public investment expenditure.
He further said, against this backdrop, the Bank forecast the economy to continue to grow above four percent in 2023.
Governor Saidy noted that the risks to the growth outlook are skewed to the downside, including the volatile geopolitical environment, rising global economic fragmentation as well as some structural rigidities in the domestic economy.
According to him, the results from the Central Bank’s latest Business Sentiment Survey revealed that the sentiments of businesses improved, and most of the respondents expect higher economic activity in the next three months.
He added that respondents also expect business activity to rise in the third quarter to be driven by strong 3 consumer demand. However, inflation expectations remain high with most of the businesses surveyed expecting higher inflation in the next three months.