flag Cape Verde Cape Verde: Economic Outline

Economic Indicators

Cabo 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 (25% of GDP) affected by the global economic crisis and the outbreak of the Covid-19 pandemic. In 2023, the economy experienced a slowdown in growth, coupled with a decrease in inflation and an expansion of the current account deficit. Economic growth decelerated to 4.8%, primarily due to a stabilization in service exports following the post-COVID rebound in tourism (World Bank). Sectors such as accommodation, transport, and commerce drove growth on the supply side, while exports and private consumption fueled growth on the demand side. In 2024, it is anticipated that real GDP growth will hold steady at 4.7%. However, there are notable downside risks to this outlook, including the possibility of commodity price spikes, a potential decline in external demand within the tourism sector, and limited advancements in State-Owned Enterprise (SOE) reform, which could impede fiscal consolidation and growth. Climate-related shocks also present a significant threat, given the country's vulnerability to such events.

The fiscal deficit contracted to 0.5% of GDP in 2023 from 4.3% in 2022, supported by increased revenues. Revenue rose by approximately 20%, fueled by corporate income tax, VAT collection, and revenues linked to airport concessions. Despite a slight increase in total expenditure, public debt declined from 127.1% to 115.3% of GDP. Inflation declined to 3.7%, attributed to the moderation of international food prices and a decrease in oil prices, while it is projected to decrease to 2.7% in 2024 (World Bank). The current account deficit widened from 3.4% to 5.3% of GDP, driven by reduced exports and remittances, particularly in the tourism sector. 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. Cabo Verde's economy is very much service-oriented with commerce, transport, tourism, and public services accounting for about three-fourths of GDP. At the end of 2023, the Executive Board of the IMF concluded the Third Review of Cabo Verde’s performance under the 36-month Extended Credit Facility (ECF) arrangement, which was endorsed on June 15, 2022, and endorsed the application for an 18-month arrangement under the Resilience and Sustainability Facility (RSF). The conclusion of the review permits the authorities to access the equivalent of SDR 4.5 million (approximately USD 6 million). The RSF arrangement is for 100 percent of quota (SDR 23.69 million, roughly USD 31.45 million). In finalizing the third review, the Executive Board authorized the authorities’ request for adjustments to the end-December 2023 and end-June 2024 performance criteria.

Cabo Verde has recently been upgraded to a middle-income country status. However, despite its optimistic economic results, poverty, unemployment, and 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. The unemployment rate stood at 12.1% in 2023, according to World Bank data. Joblessness is highest among young people, with a rate estimated at around 40% (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 is providing a channel for construction and creating jobs. The country’s GDP per capita (PPP) was estimated at USD 8,716 in 2022 by the World Bank.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 2.312.602.802.993.20
GDP (Constant Prices, Annual % Change) 17.04.44.54.64.6
GDP per Capita (USD) 4,0484,5034,7905,0625,350
General Government Gross Debt (in % of GDP) 127.3113.1109.7105.5101.4
Inflation Rate (%) n/a5.22.02.02.0
Current Account (billions USD) -0.08-0.15-0.14-0.15-0.16
Current Account (in % of GDP) -3.6-5.8-5.0-4.9-4.9

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 GBP 134.60125.88124.63123.13124.10

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) 11.0 22.2 66.9
Value Added (in % of GDP) 3.7 16.8 56.7
Value Added (Annual % Change) -13.7 6.8 24.2

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2024 (e)2025 (e)2026 (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

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Sources of General Economic Information

Main Online Newspapers and Portals
Expresso das Ilhas
A Nacao
Radiotelevisão Caboverdiana
AllAfrica Cape Verde
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 2024

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