Cape Verde’s economy grew 3.9 percent last year

A beach in Praia, capital of Cape Verde

Cape Verde’s economy in 2017 added to the economic dynamism already evident in 2016, by posting growth of 3.9 percent, one-tenth of a percentage point higher than a year earlier, the Bank of Cabo Verde reported in its annual report for 2017, recently released in Praia.

“The improved performance of the economy […] was favored by the strengthening of the recovery cycle of the country’s partner economies and their labor markets, as well as by budgetary impulses (mainly through the execution of public investments and with a significant multiplier effect) and monetary drives (as a result of the reinforcement of monetary policy easing measures in June),” the document said.

The Cape Verdean central bank’s annual report adds that growth was determined on the demand side by the positive contributions of private consumption and private and public investment and, on the supply side, by increasing the gross added value of manufacturing, infrastructure, public administration, electricity and water, housing and catering and trade, in a context of increased employment in the construction, public administration, housing and catering and manufacturing sectors, (0.8 percent in average annual terms) and a consistent increase in credit to the private sector (6.8 percent, a faster pace since 2011).

The expansion of aggregate demand, given the constraints on productive capacity, resulted, however, in a significant increase in imports and, consequently, in the aggravation of trade and current account balances and widening of the financing needs of the economy, which were not offset by the growth of net inflows, which led to a drop in the country’s net foreign reserves, of around 13 million euros, for the first time since 2011.

The document noted that the country’s economic performance in 2017 suggests that it will add to the recovery cycle but that it needs to strengthen its productive capacity and resistance to exogenous shocks (namely related to European economic cycles), in order to achieve desired levels of well-being, calling on policy-makers to design and implement an efficient framework of structural reforms. MDT/Macauhub