• World Bank projects 5.9% GDP growth for Cape Verde driven by low-cost airlines
• Inflation expected to stay low at around 2% thanks to falling fuel prices
• Poverty rate seen dropping to 13.3% in 2025 and 11.2% by 2027

Cape Verde’s economy is expected to grow by 5.9% in 2025, according to the latest World Bank forecast. The report, released on June 23, highlights the entry of low-cost airlines into the market as a key factor behind this growth momentum.

Falling fuel prices are also expected to help keep inflation low, with the rate projected to remain around 2% in 2025.

The World Bank report, titled “Cabo Verde Economic Update – Spring 2025: Unlocking Women’s Economic Potential,” states that “this, along with strong performance in the services and industry sectors, will contribute to reduce poverty to 13.3 percent in 2025, with levels expected to fall to 11.2 percent by 2027”.

Foreign currency reserves are forecast to stabilize at the equivalent of 5.5 months of imports, providing sufficient backing for the country's currency peg and a buffer against external shocks.

This positive outlook follows Cape Verde’s ongoing post-pandemic recovery efforts. The government has introduced several measures to boost the economy and fight poverty. According to the World Bank, these policies helped lower unemployment to 10.3% and poverty to 15% in 2023. In 2024, Cape Verde recorded economic growth of 7.3%, supported by strong tourism activity and a modest recovery in agriculture.

Tourism Dependency Still a Concern

Despite the improvements, Cape Verde remains vulnerable to external risks. Its economy is heavily dependent on tourism, making it sensitive to global shocks, energy price fluctuations, and food price volatility. Fiscal pressures from state-owned companies and rising global trade uncertainties also pose risks.

The International Monetary Fund (IMF) warns that slower global growth and supply chain disruptions could negatively affect tourism, inflation, and overall economic performance.

Climate-related risks, such as rising sea levels and extreme weather, are also seen as long-term threats to infrastructure and economic stability.

Looking ahead, Cape Verde’s economic growth is expected to stabilize around 5% in the medium term, supported by more efficient public sector management and efforts to attract private investment.