Economic Outline

flag Cape Verde Cape Verde: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Cape Verde is considered by many institutions one of the most stable countries in Africa, and benefits from good democratic governance, transparency and high literacy rates and health metrics. However, the country has experienced relatively modest growth over the past few years, particularly due to a decrease in tourism affected by the global economic crisis and the outbreak of the Covid-19 pandemic. After contracting by -14.8% in 2020, economic growth rebounded to 4% in 2021 (IMF), supported by the loosening of travel restrictions and higher vaccination rates in Europe, where the majority of tourists come from (Coface). According to IMF estimates, GDP growth should further accelerate to 6.5% in 2022 and 6.1% in 2023, as tourism activity continues to recover and investment and remittances inflows from Europe increase.

Cape Verde's economy was hit hard by the pandemic, as global economic downturn, travel restrictions and domestic containment measures pushed the economy into recession. In 2021, the economy started to recover and public finances improved slightly, but the crisis had long-lasting impacts. Public deficit declined from 9.1% GDP in 2020 to -8% GDP in 2021, but remained at a high level (Coface). It is expected to further narrow to -5% GDP in 2022, as the authorities prioritise fiscal consolidation (Coface). Public debt increased from 158.1% GDP in 2020 to 160.7% GDP in 2021, putting the country at risk of debt distress (IMF). It is expected to decrease to 152.1% GDP in 2022 and 143.5% GDP in 2023 (IMF). It is mostly external, held by multilateral and bilateral donors and concessional, which tempers the high risk of default (Coface). Inflation slightly increased from 0.6% in 2020 to 1.5% in 2021 and while rising should remain low in 2022 (1.6%) and 2023 (1.7%) (IMF).  This low level is mainly due to an exchange rate peg to the euro (AfDB). The government priorities are to support the post-pandemic recovery, as well as to improve fiscal and external positions and restore debt sustainability. The 2022 budget, mostly financed by taxes, donations and loans, prioritises general public services, followed by education, social protection, economic affairs, health, security, housing, and environmental protection. The State intends to reduce its energy dependency by developing renewable energies, and has pledged to obtain 100% of its electricity from renewable sources by 2025. The country has also vowed to lead African states towards similar efforts. Cape Verde's economy is very much service-oriented with commerce, transport, tourism, and public services accounting for about three-fourths of GDP.

Cape Verde has recently been upgraded to a middle-income country status. However, despite its optimistic economic results, poverty, unemployment, lack of diversification affect a large part of the population and infrastructure remains poorly developed. The country also struggles with drug traffickers, and income inequality and social exclusion remain critical. Unemployment rate reached 14.5% according to official data, and is forecast to only slightly decrease to 14.2% in 2022. Joblessness is highest among young people, with a rate estimated at more than 40% (AfDB). Poverty was estimated at 35.5% of the population in 2020 (AfDB). To increase productivity and address high youth and female unemployment, the government is supporting micro, small, and medium enterprises through business incubator grants and employability pilot projects. Additionally, the construction of new hotels are providing a channel for construction and creating jobs.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 1.98e1.71e1.892.062.26
GDP (Constant Prices, Annual % Change) 5.7e-14.84.06.56.1
GDP per Capita (USD) 3,602e3,065e3,3473,6183,918
General Government Gross Debt (in % of GDP) 124.9158.1160.7152.1143.5
Inflation Rate (%) 1.10.61.51.61.7
Current Account (billions USD) -0.01-0.27-0.25-0.18-0.12
Current Account (in % of GDP) -0.4-15.9e-13.2-8.7-5.2

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Cape Verde Escudo (CVE) - Average Annual Exchange Rate For 1 MUR 2.802.842.752.772.46

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 10.6 21.8 67.6
Value Added (in % of GDP) 4.9 23.1 58.9
Value Added (Annual % Change) -6.5 -2.0 -14.2

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 20212022 (e)2023 (e)
Unemployment Rate (%) 8.58.58.5

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 233,492237,728228,079

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 63.50%63.73%63.89%
Men activity rate 70.06%70.01%69.90%
Women activity rate 56.66%57.18%57.63%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
63,8/100
World Rank:
77
Regional Rank:
5

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
27/180

Source: World Press Freedom Index, Reporters Without Borders

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Sources of General Economic Information

Main Online Newspapers and Portals
Allafrica, Cape Verde news
Afrol, Cape Verde news
Expresso das Ilhas (in Portuguese)
A Nacao
A Semana
Cape Verde BBC Media Profile
Useful Resources
The official website of the government (only in Portuguese)
Ministry of Finance
Banco de Cabo Verde
 
 

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Latest Update: May 2022