Cabo Verde¡¯s economy continued to recover strongly in 2024, with real GDP growth estimated at 7.3%, fueled by a surge in tourist arrivals and the first positive agricultural season in years. Inflation fell to 1% - its lowest level in recent history - supporting real income growth and helping to reduce poverty to below pre-pandemic levels.
While the recovery reflects the country¡¯s sustained commitment to macroeconomic stability, 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 , analyzes recent trends and outlines a policy agenda for inclusive growth. It underscores how sound macroeconomic management, SOE reforms, and closing gender gaps in labor markets can expand the country¡¯s economic potential.
Recent Economic Developments
The services sector, particularly tourism, was the dominant growth driver in 2024, contributing over 70% of total expansion. Tourist arrivals grew by 16.5%, reaching 1.18 million, with a notable shift toward non-traditional offerings like apart hotels. The agriculture sector ¨C which has struggled with years of drought - also experienced a rebound.
Inflation fell sharply to 1.0%, driven by lower global food and fuel prices, contributing to ease cost of living. The fiscal deficit widened modestly to 1.1% of GDP, reflecting better execution of the investment budget. Despite this, strong growth and fiscal prudence contributed 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, the outlook is subject to significant downside risks. Cabo Verde remains heavily dependent on external demand and imported goods, making it vulnerable to global shocks, commodity price volatility, and climate-related hazards. Pressures ahead of the 2026 elections may slow consolidation efforts and the pace of needed reforms.
Advancing Gender Equality for Inclusive Growth
Despite impressive gains in health and education, Cabo Verdean women face persistent labor market barriers, earning up to 14.4% less than men, and remaining underrepresented in formal and high-paying sectors. Care responsibilities and occupational segregation are key constraints.
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.
Unlocking women¡¯s economic potential requires an integrated strategy that includes:
- Expanding access to childcare and flexible work arrangements.
- Promoting women¡¯s skills development in Science, Technology, Engineering, and Mathematics (STEM), as well as in Technical and Vocational Education and Training, and the green/blue economy.
- Combatting employer discrimination and reshaping social norms through targeted campaigns and legal reforms.
To sustain progress and reduce vulnerability, Cabo Verde must continue to:
- Improve SOE governance and operations, with particular attention to newly created public entities.
- Maintain fiscal discipline while executing high-impact public investments.
- Deepen economic diversification, including in sectors like the blue and digital economies.
- Promote inclusive policies, especially gender-responsive strategies that expand opportunity for all.
Cabo Verde is recovering well from recent shocks. With continued reform momentum and inclusive policy choices, it can build a more resilient, equitable, and sustainable economy in the years ahead.