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Senegal & Gambia Country Risk Report Q1 2017

  • October 2016
  • -
  • Business Monitor International
  • -
  • 47 pages

Core Views

We forecast that real GDP growth in The Gambia will strengthen in 2017 on the back of a boost in remittances, increased aid and an ongoing recovery in the tourism sector. We forecast a 5.9% expansion in 2017, following a projected 4.2% in 2016. The outlook is much improved since the Ebola crisis (which proved a drag on growth in 2014 and 2015), and the border dispute and questionable monetary policy which weighed on growth in 2016, have dissipated. Nevertheless, The Gambia remains prone to external shocks given the economy's reliance on subsistence agriculture and tourism, and risks to the outlook in this regard are significant. The capricious nature of long-serving President Yahya Jammeh also poses significant domestic political risk. Despite opposition candidates having stepped forward to contest the upcoming December presidential elections in The Gambia, we see little chance of any result other than a fifth term for incumbent President Yahya Jammeh. President Jammeh came to power in a military coup in 1994 at just 29 years old, before winning four subsequent elections which have been heavily criticised by the international community and regional observers as being neither free nor fair. Agriculture will remain the dominant sector in The Gambia, though investment into other industries such as tourism will help drive real GDP growth. The country will remain reliant on foreign grants in order to meet its fiscal obligations, although these are under threat given political developments. The Gambia is looking increasingly to Arab Gulf states for funding. Core Views

We are highly positive towards Senegal over the near and long term, forecasting that the country will enjoy its strongest GDP growth since independence in 1959 over the next decade. Senegal underperformed against Sub-Saharan Africa (SSA) over the 15 years to 2015, averaging real GDP growth of 4.1% annually compared to SSA's 5.2%. However, growth will outstrip the wider region over the next decade, averaging 7.1% annually compared to 4.4% in SSA. Having performed below par previously, the strong growth we forecast is in part due to base effects. That said, it is the effective exploitation of this previously untapped potential by the government of President Macky Sall and its Plan Sénégal Émergent (PSE) that will realise the growth. Progress under the PSE to entice and implement investment will see real GDP growth come in at 7.2% in 2017 and 6.7% in 2018, rising to 6.4% in 2019. While more stable than most other Sub-Saharan African states, Senegal is a high-risk target for attack by Islamist terrorists, and any major incident would jeopardise growth in the country's tourism sector. Senegalese President Macky Sall will continue to focus efforts on combating the threat of terrorism over the coming years, recognising the salient danger the issue presents to the economy. Inflationary pressures will be benign, in part thanks to the XOF Franc's peg to the euro.

Table Of Contents

Senegal and Gambia Country Risk Report Q1 2017
Executive Summary - The Gambia........................................................................................................ 11
Core Views.....................................................................................................................................................................................11
Key Risks.......................................................................................................................................................................................11
Chapter 1.1: Economic Outlook - The Gambia.................................................................................... 13
SWOT Analysis......................................................................................................................................................... 13
Economic Growth Outlook...................................................................................................................................... 14
Tourism, Remittances And Aid Will Boost Growth....................................................................................................................14
Growth in The Gambia will strengthen in 2017 as the effects of poor policy decisions in 2016 dissipate. Growth will be driven by
recovering visitor numbers, increased remittances and greater aid flows.
Chapter 1.2: 10-Year Forecast - The Gambia....................................................................................... 17
The Gambian Economy To 2025............................................................................................................................. 17
Robust Growth Outlook Susceptible To External Shocks........................................................................................................17
Real GDP growth in Gambia will be robust over the coming 10 years, hovering around 5.0% per annum. This will be driven by
agriculture and tourism, though growth will be constrained by poor infrastructure.
TABLE: LONG-TERM MACROECONOMIC FORECASTS.....................................................................................................................................17
Chapter 1.3: Political Outlook - The Gambia........................................................................................ 21
SWOT Analysis......................................................................................................................................................... 21
Domestic Politics..................................................................................................................................................... 22
Rising Risk In Run-Up To Inevitable Jammeh Electoral Victory...............................................................................................22
Political risk will rise in The Gambia as the December election approaches, but we see little chance of President Yahya Jammeh being
defeated in what are unlikely to be free and fair elections.
Long-Term Political Outlook................................................................................................................................... 23
President Jammeh To Shape Next Decade.................................................................................................................................23
The Gambia's political landscape will continue to be shaped by President Yahya Jammeh over the next decade, as political and press
freedoms will continue to be reduced. A change in government will only come about through either a military coup or revolution.
Chapter 1.4: Operational Risk - The Gambia....................................................................................... 25
SWOT Analysis......................................................................................................................................................... 25
Executive Summary - Senegal ............................................................................................................. 27
Core Views.....................................................................................................................................................................................27
Key Risks.......................................................................................................................................................................................27
Chapter 2.1: Economic Outlook - Senegal........................................................................................... 29
SWOT Analysis......................................................................................................................................................... 29
Economic Growth Outlook...................................................................................................................................... 30
Coherent Economic Plan Will Drive Growth...............................................................................................................................30
Senegal will enjoy strong real GDP growth over the coming years as the government continues to improve the business environment
and encourage s inward investment into the secondary sector. The development of the offshore oil sector, which has recently confirmed
sizeable deposits, will also drive the expansion.
Chapter 2.2: 10-Year Forecast - Senegal.............................................................................................. 33
The Senegalese Economy To 2025......................................................................................................................... 33
Growth To Outpace Previous Decade.........................................................................................................................................33
Senegal will enjoy strong real GDP growth over the next decade, averaging 7.1% annually, an improvement on the 3.8% recorded over
the previous 10 years. Growth will be driven by private consumption, though the country's poor infrastructure will impede development.
TABLE: LONG-TERM MACROECONOMIC FORECASTS.....................................................................................................................................33
Chapter 2.3: Political Outlook - Senegal.............................................................................................. 37
SWOT Analysis......................................................................................................................................................... 37
Domestic Politics..................................................................................................................................................... 38
Terror Attack Will Remain Pertinent Threat................................................................................................................................38
While more stable than most other Sub-Saharan African states, Senegal is a high-risk target for attack by Islamist terrorists, and any
major incident would jeopardise growth in the country's tourism sector. Senegalese President Macky Sall will continue to focus efforts on
combating the threat of terrorism over the coming years, recognising the salient danger the issue presents to the economy.
Long-Term Political Outlook................................................................................................................................... 39
Bastion Of Regional Stability To Flourish Politically.................................................................................................................39
Senegal will continue to develop politically over the next decade, cementing its reputation as one of the most stable democracies in
Africa. There are challenges to this stability, not least from poverty and unemployment, but we believe that accelerating economic
development will help Senegal overcome these.
Chapter 2.4: Operational Risk - Senegal.............................................................................................. 41
SWOT Analysis......................................................................................................................................................... 41
Chapter 3: BMI Global Macro Outlook................................................................................................... 43
Global Macro Outlook.............................................................................................................................................. 43
Broad Recovery But Three Notes Of Caution.............................................................................................................................43
TABLE: GLOBAL FORECASTS, 2015-2020...........................................................................................................................................................43
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %....................................................................................................................................44
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %...................................................................................................................................45
TABLE: THE GAMBIA - MACROECONOMIC DATA and FORECASTS...................................................................................................................47
TABLE: SENEGAL - MACROECONOMIC DATA and FORECASTS.........................................................................................................................47

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