Transfer learning for predicting of gross domestic product growth based on remittance inflows using RNN-LSTM hybrid model: a case study of The Gambia

Insights into the magnitude and performance of an economy are crucial, with the growth rate of real GDP frequently used as a key indicator of economic health, highlighting the importance of the Gross Domestic Product (GDP). Additionally, remittances have drawn considerable global interest in recent years, particularly in The Gambia. This study introduces an innovative model, a hybrid of recurrent neural network and long-short-term memory (RNN-LSTM), to predict GDP growth based on remittance inflows in The Gambia. The model integrates data sourced both from the World Bank Development Indicators and the Central Bank of The Gambia (1966-2022). Pearson's correlation was applied to detect and choose the variables that exhibit the strongest relationship with GDP and remittances. Furthermore, a parameter transfer learning technique was employed to enhance the model's predictive accuracy. The hyperparameters of the model were fine-tuned through a random search process, and its effectiveness was assessed using RMSE, MAE, MAPE, and R² metrics. The research results show, first, that it has good generalization capacity, with stable applicability in predicting GDP growth based on remittance inflows. Second, as compared to standalone models the suggested model surpassed in term of predicting accuracy attained the highest R² score of 91.285%. Third, the predicted outcomes further demonstrated a strong and positive relationship between remittances and short-term economic growth. This paper addresses a critical research gap by employing artificial intelligence (AI) techniques to forecast GDP based on remittance inflows.