AfDB Forecasts Cape Verde Economic Growth at 4.7% by 2026
Cape Verde’s economy is projected to experience a period of “moderate growth” over the next two years, with the African Development Bank (AfDB) forecasting a slowdown to 4.7% in 2026. This follows growth cycles of 7.3% in 2024 and 5.2% in 2025.
Tourism and Infrastructure Drive Growth
In its latest African Economic Outlook report, presented today at the AfDB Group’s annual meeting in Brazzaville, the bank noted that despite the slight cooling, Cape Verde’s Gross Domestic Product (GDP) remains resilient. The economy will continue to be anchored by robust demand for tourism services and sustained investment in national infrastructure.
Growth is expected to stabilize slightly in the following year, with a projected increase to 5.0% in 2027. Meanwhile, inflation is forecast to remain manageable at 2.6% in 2026 and 2.3% in 2027. This period of stability may prompt the Central Bank to shift from active intervention to a more restrained monetary policy.
Financial Outlook and Global Risks
The report highlights a shift in the country’s fiscal balance. While the current account is expected to stay positive at 1.1% of GDP in 2026, it is projected to slip into a 1.8% deficit by 2027. Similarly, the public deficit is expected to widen to 1.3% in 2026 as the government ramps up its public investment needs.
However, the AfDB warned of external headwinds. Risks to these projections include an “unfavorable global trade context,” which could dampen global economic demand and disproportionately impact peripheral economies like Cape Verde’s.
Broader Challenges for the African Continent
The Cape Verdean outlook arrives amidst a more sober continental assessment. The report, titled Mobilizing Africa’s Development Financing on a Large Scale in a Fragmented World, predicts that Africa’s overall growth will slow to 4.2% this year—potentially dropping to 4% if regional conflicts, such as those in the Middle East, remain unresolved.
The annual meeting in the Republic of the Congo has brought together representatives from 81 member countries, including heads of state and central bank governors, to discuss financing development in an increasingly divided world. This year’s event is being held in a hybrid format, balancing physical attendance with remote participation due to heightened sanitary measures against Ebola in the region.
Image: Pexels – damien Saillet
