Cabo Verde's economy showed strong recovery in 2024, with real GDP growth estimated at 7.3%. This was driven by a rise in tourist arrivals and the first positive agricultural season in years. Inflation decreased to 1%, supporting real income growth and reducing poverty to below pre-pandemic levels.
The country's commitment to macroeconomic stability is evident, but diversifying the economy beyond tourism, reducing fiscal vulnerabilities from the State-Owned Enterprise (SOE) sector, and investing in inclusive human capital development remain critical.
The 2025 Cabo Verde Economic Update titled "Unlocking Women’s Economic Potential" analyzes recent trends and outlines a policy agenda for inclusive growth. It emphasizes that sound macroeconomic management, SOE reforms, and closing gender gaps in labor markets can expand the country’s economic potential.
In 2024, the services sector, particularly tourism, was the dominant growth driver, contributing over 70% of total expansion. Tourist arrivals grew by 16.5%, reaching 1.18 million, with a shift toward non-traditional offerings like apart hotels. The agriculture sector also rebounded after years of drought.
Inflation fell sharply to 1.0%, driven by lower global food and fuel prices. The fiscal deficit widened modestly to 1.1% of GDP due to better execution of the investment budget. Despite this, strong growth and fiscal prudence led to a decline in central government debt to 110.2% of GDP. The current account moved into surplus (3.7% of GDP) for the first time in four years.
Real GDP growth is projected at 5.9% in 2025, with a medium-term trend near 5%. This along with easing inflation will contribute to ongoing poverty reduction efforts. Continued commitment to fiscal consolidation will see the fiscal deficit and public debt narrow to 0.6% of GDP and 93.9%, respectively, by 2027.
However, significant downside risks exist as Cabo Verde remains heavily dependent on external demand and imported goods, making it vulnerable to global shocks, commodity price volatility, and climate-related hazards.
Despite gains in health and education, Cabo Verdean women face persistent labor market barriers such as earning up to 14.4% less than men and being underrepresented in formal sectors.
The report highlights that closing gender gaps could boost GDP by up to 12.2%, improve productivity in sectors like tourism, and expand female entrepreneurship.
To unlock women’s economic potential requires an integrated strategy including expanding access to childcare and flexible work arrangements; promoting women’s skills development; combatting employer discrimination; reshaping social norms through campaigns; legal reforms; improving SOE governance; maintaining fiscal discipline while executing high-impact investments; deepening economic diversification; promoting inclusive policies especially gender-responsive strategies.
Cabo Verde is recovering well from recent shocks with continued reform momentum it can build a more resilient equitable sustainable economy ahead.