Bank of Cape Verde increases country’s growth forecast to 6.6%

The recent October 2021 Monetary Policy Report, presented recently in the city of Praia, points out that the Bank of Cape Verde (BCV) has revised the archipelago’s economic growth forecast upwards for this year, to 6.6%, given the favorable evolution of economic activities and tourism recovery, forecasting 5.6% for 2022.

“With the economy growing, the average annual inflation rate should increase to 1.6% by the end of the year, reflecting the upward profile of energy commodity prices and their transmission to domestic prices with the upward update of administered fuel prices, electricity, increased domestic demand and some conditioning in the supply of some products,” explained the governor of the Bank of Cape Verde, Óscar Santos.

These “more optimistic economic prospects” are justified, he said, with “the more favorable development of economic activity” and because of “the expectation of some recovery in tourism in the last quarter, in the assumption of control of the pandemic situation in the country,” believes Óscar Santos.

The governor added that the inflation rate is also expected to increase in 2022, which should reach 1.9%, “taking into account the lagged effect of imported inflation on domestic prices, the impact of the expected increase in VAT and some import duties on goods, as well as the upward update of electricity prices,” since October 2021 and “with greater effect in 2022.

“In a more adverse scenario, assuming that a set of downside risks will materialize, growth could stand at 4.7%.

“The associated factors are related to the behavior of consumption, the recovery pace of tourism exports, and the effects of the crisis on growth through the possible impact on unemployment and the bankruptcy of some companies,” says the governor of BCV.

With information from Forbes

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