Cape Verde’s Economy Grows 5.1% in 2023 Amid Global Challenges

In 2023, Cape Verde’s economy grew by 5.1%, a figure that marks a reduction from the previous year’s impressive recovery phases, according to the latest data released by the Central Bank.

The national gross domestic product (GDP) increased, aligning more closely with the country’s growth potential.

Prime Minister Ulisses Correia e Silva expressed ambitions to enhance this potential beyond the current rate in May.

Following a significant economic contraction of 20.8% in 2020 due to the COVID-19 crisis, the island nation saw growth of 7% in 2021 and an extraordinary 17.4% in 2022.

The current growth rate, while lower, reflects a stabilizing economy post-recovery. For the current year, the Central Bank forecasts a 5% economic growth.

This is slightly higher than the government’s and the International Monetary Fund’s projection of 4.7%.

These projections underline cautious optimism, acknowledging external economic challenges and the fading impact of the pandemic recovery.

In 2023, sectors linked to tourism showed less favorable year-on-year performance, with moderated private consumption and reduced investment noted.

Cape Verde’s Economic Snapshot

Despite these challenges, the annual average inflation rate decreased to 3.7% from 7.9% in 2022.

This indicates a decline in inflation pressures due to lower international prices for energy and food, subdued demand, and base effects. The report also highlights an improved current account deficit, now at 2.5% of GDP.

This improvement is due to increased tourism service exports, official current transfers, income from net foreign reserves, and a significant slowdown in imports.

Furthermore, Cape Verde‘s stock of net international reserves grew to €685 million, ensuring coverage for 6.2 months of imports. This marks an increase from the previous period’s coverage of 4.2 months.

The inflow of funds was sufficient to meet the financing needs of the economy, allowing the country to accumulate about €46 million in reserve assets by year-end.

In the backdrop of these economic activities, the unemployment rate stood at 10.3%, with public debt reaching 112.2% of GDP.

These figures reflect a complex economic landscape. Resilience and strategic management continue to play crucial roles in the nation’s recovery and growth trajectory.

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