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 7% in 2021 and continued on a positive path in 2022, when growth was estimated at 10.5% by the IMF, supported by a rebound in tourist arrivals and credit growth, as well as by robust household consumption. According to the IMF’s latest forecast, GDP growth should be consistent in 2023 (4.4%) and 2024 (5.7%), 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 the global economic downturn, travel restrictions and domestic containment measures pushed the economy into recession. Preliminary figures indicate that the fiscal situation in the first six months of 2022 has shown signs of improvement. Tax revenue growth was widespread, fueled by a resurgence in economic activity and aided by government policies. As a result, Fitch Ratings estimated the fiscal deficit at 5.5% of GDP in 2022 (from 7.3% in 2021), with a further contraction expected in 2023 (to 4.5%). Nevertheless, the danger of fiscal hazards stemming from State-Owned Enterprises remains elevated. Public debt increased from 142.3% GDP in 2021 to 154.5% GDP in 2022, putting the country at risk of debt distress (IMF). Fitch expects Cabo Verde's public debt to follow a downward trajectory over the medium term, declining to 121% of GDP by 2024, mainly driven by strong nominal GDP growth, but still above its pre-pandemic figure of 113.2% (2019) and well above the 'B' median figure of 55.7% of GDP. As of October 2022, the inflation rate in Cabo Verde is relatively high at 8.5% on a year-on-year basis (IMF), partly due to the increase in global food and energy prices, which have raised the costs of fuel and food. The government has taken measures to assist those in need by providing effective subsidies for essential food and electricity items. These subsidies are anticipated to continue until the first half of 2023. Although the inflation rate is expected to decrease in 2023, it will remain above the average of the past five years. 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. In June 2022, the Executive Board of the International Monetary Fund (IMF) authorized a three-year agreement for Cabo Verde under the Extended Credit Facility (ECF). The approved amount is equivalent to SDR 45.03 million, which is roughly USD 60 million at the time of approval. The primary goal of the agreement is to address the country's financial shortfalls, aided by the continued funding of Cabo Verde's development partners.

Cape 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 reached 12.1% in 2022, according to official data. Joblessness is highest among young people, with a rate estimated at more than 40% (AfDB). Poverty was estimated at 35.5% of the population by the 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 8,460 in 2022 by the IMF.

 
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 GHS 24.9822.4820.3718.9417.30

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
Allafrica, 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: December 2023