Cabo Verde's economy is recovering from the challenges posed by the COVID-19 pandemic. However, the crisis has underscored the country's inherent weaknesses, including heavy dependence on tourism, lack of buffers for economic shocks, and risks in the State-Owned Enterprises (SOE) sector. Climate change impacts exacerbate these vulnerabilities.
The Economic Update 2024, titled "Blue Economy: The Latent Potential of Fisheries and Aquaculture in Cabo Verde," analyzed the state of the economy in 2023 and made projections for 2024. It aimed to assess the short-term economic outlook and offer policy options to strengthen the economy.
Economic growth slowed to 5.1% in 2023 despite exports, especially in tourism, returning to pre-pandemic levels. Inflation fell to 3.7%, driven by decreases in fuel and food prices. While tourism continues to lead growth, other sectors such as transportation and public administration also contribute significantly. Nonetheless, poverty levels remain higher than before the pandemic.
Fiscal consolidation efforts have been successful, reducing the budget deficit to -0.3% of GDP in 2023. However, SOEs' dependence on government support poses considerable fiscal risks. Public debt has fallen to 113.8% of GDP but remains high.
Forecasts indicate stable real GDP growth at around 4.7% in 2024, supported by structural reforms and further reductions in inflation. Nevertheless, Cabo Verde faces significant risks including potential increases in commodity prices, weak external demand in tourism, limited progress in SOE reforms, and climate-related shocks.
Excessive reliance on tourism leaves Cabo Verde vulnerable to external shocks exacerbated by climate change risks. Urgent reforms are needed to transition towards more sustainable and resilient economic activities within the framework of a blue economy.
As an archipelago country with vast marine resources, Cabo Verde has a unique opportunity to develop its blue economy sustainably. This includes enhancing its fishing sector while addressing challenges such as overfishing and inadequate infrastructure. Aquaculture holds significant promise but requires investment and technical assistance.
To realize this potential fully, responsible management of marine resources is essential through investments in infrastructure, governance, and statistical capacity. An integrated and sustainable plan can enable Cabo Verde to leverage its Exclusive Economic Zone for a more resilient and prosperous future.