Cape Verde economy struggle

In common with many countries around the world, Cape Verde is feeling the effects of the war in Ukraine. The Prime Minister of Cape Verde has declared an emergency and has announced mitigation measures valued at some €80m. Cape Verde is suffering from the effects of inflation, which reduces people’s ability to purchase food. The measures that will be introduced will aim to reduce the impact of the rising costs of food and energy. Cape Verde economy is in crisis.

This situation is not only a result of the war, but also a direct result of the effects of Covid-19. The sharp reduction in the number of tourists during the pandemic has been very damaging to the country’s economy. A forecast growth in the economy of 6% during 2022 has now been revised down to 4% because of Ukraine. This is based on figures produced by The Bank of Cape Verde, which predicted growth of between 3.5 and 4.5%. Surviving in times of crises such as the pandemic and the war, is very challenging for developing countries.

It is to be hoped that the inability of people to travel for the past two years will result in a larger number of visitors to the country than was previously predicted. Tourism is a very important part of the country’s gross domestic product (GDP). The tourism sector normally represents about 25% of GDP. It is also a large employer. There is some encouraging news however. In May of this year, there was a 313% increase in traffic through the airports, compared with 2021.

[01 July 2022]