The monetary policy report presented by the Governor of the BCV reveals that the Cape Verdean economy grew by 7.3% in 2024, with inflation dropping to 1.0% and a "surplus" in the external balance of 3.7% of GDP.
"The national economy recorded strong dynamism, with a growth of 7.3%, driven by private consumption and service exports, especially tourism," said Óscar Santos, adding that the average inflation rate in Cape Verde fell to 1.0%, due to the decline in energy and food prices in international markets.
In the external sector, the current account recorded a surplus of 3.7% of GDP, supported by strong tourism-related exports, re-exports of fuels and food products at national ports and airports, as well as remittances from emigrants.
This result was also favored by the slowdown in imports of goods and services, which offset the poor performance of the financial balance and helped strengthen the country’s net foreign reserves.
He explained that the accumulated reserves are now sufficient to cover 6.5 months of estimated imports for 2024, compared to 6.2 months in 2023. In the monetary sector, credit to the economy grew by 5.6%, reflecting the stronger dynamics of economic activity, increased household purchasing power, and greater willingness from banks to grant credit, both to businesses and individuals.
Given the current scenario of increasing uncertainty marked by geopolitical and trade tensions, the BCV forecasts an economic slowdown of 5.5% in 2025 and 5.0% in 2026, revising inflation upward. The central bank has also revised its inflation forecasts, predicting a rate of 1.8% for 2025 and 1.4% for 2026, with both values remaining below the 2% threshold, the benchmark for price stability, and thus within a range considered comfortable by the BCV.
In light of persistent global uncertainty, exacerbated by factors such as the ongoing trade conflict between China and the United States, which has only temporarily cooled down, the BCV states it is alert and ready to act whenever necessary, ensuring the defense of the country’s macroeconomic stability and exchange rate regime.
Source: FAAPA