IMF Raises Cape Verde GDP Forecast to 6% Amid Tourism Boom
The International Monetary Fund (IMF) has significantly upgraded its economic growth forecast for Cape Verde, citing a booming tourism sector as the primary driver behind the archipelago’s strengthening economy. The revised figures, released following an IMF mission in Praia, suggest the nation will comfortably outperform its regional neighbors.
A Turnaround in Projections
In a notable shift from its October assessment, the IMF raised its 2024 growth outlook by 1.3 percentage points, jumping from 4.7% to 6%. For 2025, the organization increased its forecast from 4.7% to 5%. This update effectively erases previous fears of an economic slowdown, transforming a predicted dip into a period of sustained acceleration.
These figures place Cape Verde well above the anticipated average for sub-Saharan Africa, where the IMF projects growth of 3.6% this year and 4.2% in 2025.
Tourism Fuels the Surge
“The basis for the upgrade is tourism growth, which was stronger than we expected,” said Justin Tyson, leader of the IMF mission. Tyson noted that the semi-annual review of the country’s financing programs yielded positive results. “Tourism is growing significantly, imports were lower than expected, and exports were higher—it is a comprehensive improvement,” he summarized.
The positive outlook extends beyond GDP. The IMF predicts the current account deficit will be “much smaller” than initially feared, eventually stabilizing at around 2.5% in the medium term. Furthermore, inflation is expected to remain stable below 2% throughout 2024, aligning closely with Eurozone trends.
Consensus on Growth
The IMF’s optimism mirrors recent assessments by domestic financial authorities. Earlier this month, the Bank of Cape Verde (BCV) released even more bullish estimates, projecting growth of 6.1% for 2024 and 5.6% for 2025. BCV Governor Óscar Santos attributed this momentum to dynamic private consumption and a surge in service exports.
The Cape Verdean government occupies the middle ground between the IMF and the central bank. During the approval of the 2025 State Budget this month, the executive branch set its growth expectations at 5.3% for the coming year, with inflation projected to hover around 1.7%.
With all three major entities—the IMF, the central bank, and the government—revising their figures upward, Cape Verde enters 2025 with strong economic tailwinds and a clear trajectory toward medium-term stability.
Image: Pexels – Quang Nguyen Vinh
