Economical overview
Cape Verde has had a good economic
development since independence in 1975. The majority of
residents have a higher standard of living than most on
the African mainland. In 2008, the UN ceased to count
Cape Verde as one of the least developed countries in
the world. In 2012, however, growth began slowly. The
cause was mainly economic problems in the EU, an
important trading partner for the island nation. In
2014, Cape Verde's tourism industry also suffered from
problems in the wake of the Ebola epidemic in West
Africa. The following year, the economy turned up again.
Although Cape Verde is now considered a lower
middle-income country, a little over a quarter of the
population still lives below the national poverty line.
The lean soil, periodic drought and the lack of natural
resources set sharp limits for development. The country
can produce less than one-sixth of the food needed, and
exports, which mainly consist of shoes, clothes, fish
and seafood, are modest.
-
Countryaah.com:
Major imports by Cape Verde, covering a full list of top products imported by the country and trade value for each product category.
The lack of good conditions for agriculture and
industry causes the service sector to dominate - mainly
tourism, transport, trade and the public sector. The
future is especially focused on the tourism sector,
whose share of gross domestic product (GDP) has risen
significantly since the late 1990s. It is largely the
merit of tourism that Cape Verde's economy grew by an
average of 4 percent annually during the period
2004–2013.
An important addition also provides the money that
Cape Verde abroad sends home to their families. In 2012,
this money corresponded to about 10 percent of GDP. In
addition, through favorable tax conditions, the
government is trying to attract the emigrants to invest
in their home country.
-
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including CPV which represents the country of Cape Verde.
Sales of fuel and other services to the international
airlines that stop on the islands also provide important
revenue.
The dependence on aid is great
However, Cape Verde's largest revenue comes from
foreign aid. Most of the food needs as well as
investments are financed through aid. For a long time,
aid accounted for up to 90 percent of the state budget,
but governments have tried to increase the country's own
income. In 2013, official aid was estimated at $ 480 per
inhabitant, an increase from $ 400 in 2009. Important
borrowers and aid donors are Portugal, the United
States, the World Bank, the International Monetary Fund
(IMF), the EU and Spain. In recent years, China and
Japan have also provided financial support.
Foreign debt mainly consists of loans on relatively
favorable terms. However, it increased from $ 202
million in 1996 to $ 504 million ten years later. In
2013, foreign debt had risen further, to $ 1.5 billion.
Since the beginning of the 1990s, Cape Verde has
received praise from its loan and aid providers for a
well-managed economy and for taking action against
poverty. During the MPD's rule from 1991 to 2001,
several new fees were introduced and foreign investments
were encouraged, while tax collection became more
efficient. At least a dozen state-owned companies were
privatized in whole or in part. Most of them got
Portuguese owners. The MPD government also managed to
reduce the deficits in the state budget, even though
they rose again in 2000, as the government eased on the
wallet ahead of the election the following year.
The PAICV government (2001–2016) continued, to a
great extent, the austerity policy initiated by the MPD
and supported by the International Monetary Fund (IMF).
Prior to the 2001 election, PAICV had opposed the sale
of additional state-owned companies. Once in power, the
party leadership announced plans for new privatizations.
A number of sales have since been carried out, but the
IMF has expressed dissatisfaction with the slow pace of
privatization.
The EU crisis is spreading to the islands
The Cape Verde Escudo has been linked to the euro
since 2002, and Cape Verde is now trying to adapt to the
economic criteria that apply to EU countries. For
example, the government deficit must not exceed 3 per
cent of GDP, and inflation may not exceed 1.5 percent
above the average for the three EU countries with the
lowest inflation. Inflation in Cape Verde was relatively
low during the first year of the 2000s, but rose to an
average of 3 percent in 2007-2013, mainly due to higher
food and fuel prices. Thanks to better tax collection,
the budget deficit has been kept at a moderate level.
High unemployment and widespread underemployment are
among Cape Verde's greatest financial challenges (see
Labor Market). Another concern is the economic crisis in
a number of EU countries, such as Spain and Portugal,
which are important trading partners for Cape Verde. The
problems escalated when several countries in West Africa
in 2014 were affected by an epidemic of the virus
disease ebola, which led to some tourists avoiding Cape
Verde. Most analysts, however, felt that the tourism
industry, as well as the country's economy as a whole,
had good conditions to recover quickly. The IMF urged
Cape Verde to increase tax collection, cut government
spending and reduce its external debt. In 2015, the
country again had good growth.
FACTS - FINANCE
GDP per person
US $ 3,654 (2018)
Total GDP
US $ 1,987 million (2018)
GDP growth
5.5 percent (2018)
Agriculture's share of GDP
4.7 percent (2018)
Manufacturing industry's share of GDP
7.0 percent (2018)
The service sector's share of GDP
61.1 percent (2018)
Inflation
1.2 percent (2019)
Government debt's share of GDP
124.5 percent (2018)
External debt
US $ 1,762 million (2017)
Currency
hooded escudo
Merchandise exports
US $ 273 million (2018)
Imports
US $ 960 million (2018)
Current account
- US $ 104 million (2018)
Commodity trade's share of GDP
45 percent (2018)
Main export goods
re-export of fuel 1
Largest trading partner
Portugal, Spain, Netherlands
- fish, seafood, clothing, shoes
|
