Highlights:

Recent economic developments

• Growth slowed to 5.1 percent in 2023 despite exports, mainly tourism, returning to pre-pandemic levels. Inflation eased to 3.7 percent, aided by declining fuel and food prices;
• Despite recent improvements, poverty levels are higher than they were before the pandemic; Growth in the services sector has led to new jobs, especially in tourism, but households’ real income benefits have been dampened by inflation pressures, especially on food (food inflation was 9.1 percent in 2023);
• Ongoing consolidation efforts have improved the fiscal position, with a narrowing of the fiscal deficit – but persistent under execution of the capital budget is a concern

Outlook and risks

• Real GDP growth is projected to remain relatively stable in 2024, at 4.7 percent (4.2 percent in per capita terms).
• Cabo Verde’s heavy dependence on sun-and-sea tourism leaves it highly exposed to external shocks exacerbated by climate change.

Fulfilling the blue economy potential

• Cabo Verde, as an archipelagic Small Island Developing State (SIDS), has a unique blend of challenges and opportunities rooted in its extensive Exclusive Economic Zone (EEZ) juxtaposed with its small, dispersed land area.
• Fisheries could grow, with the right supporting environment. Cabo Verdean fisheries, predominantly small-scale and artisanal but with a notable semi-industrial fleet, play a vital role in providing livelihoods and food security for thousands of fishers and workers in related sectors, including many women.
• Declining total fish catches and heavy reliance on EU exports characterize Cabo Verde’s fisheries sector, indicating overfishing concerns compounded by climate change impacts and inadequate infrastructure.
• The aquaculture sector holds significant promise for sustainable economic development and food security, with favorable conditions across the islands for both offshore and onshore operations.
• With Cabo Verde’s blue economy development hinging on the pivotal role of oceanic sectors, including fisheries and aquaculture, responsible management of marine and coastal resources will be vital.

Recommendations

• The report proposes policy options to support fiscal revenue mobilization, reduce debt vulnerabilities and empower complementary engines of growth.
• The report proposes policy options to create the conditions for sustainable growth in the blue economy while building resilience to adverse shocks, whether climatic or economic.