Cape Verde’s GDP to grow 6.4% in 2005, Central Bank says

7 December 2005

Praia, Cape Verde, 07 Dec – The Cape Verde economy should expand by up to 6.4% in 2005 in relation to 2004 thanks to increased internal demand and investment, the Bank of Cape Verde (BCV) said in a report published this week.

In the report drawn up for the government on economic activity in the first three quarters of 2005, the BCV said that the pace at which the economy grew in the period was significant and increased its projection for this year’s household consumption, from 5.7% to 6.3% growth. Household consumption is the main component of Gross Domestic Product (GDP).

Public consumption, on the other hand, will grow at a slower rate than the bank previously expected. It revised its figure from 5.4% to 3.2% despite a significant level of expansion recorded up to September, due to increased staffing expenses and acquisition of goods and services.

“However, the dynamic performance of both public and private investment, worsened the balance of trade deficit, which was partly compensated by the increase in net exports of services,” the report said.

The growth rate for exported services was 25% in the first quarter of 2005 and had increased to 48% by the third quarter, the BCV said.

Cape Verde’s exports, despite their low level, increased by 50% in the third quarter, while imports increased by almost 10%.

“For the last few months of the year, our projections point to a worsening of the external situation, particularly the trade deficit, and we forecast a further increase of imports of goods and services of freight imports, within the context of globally high fuel prices,” the central bank said.

Service exports are expected to partially balance out the increased trade deficit, with the tourism sector benefiting from the opening of the country’s largest tourism development in October as well as the impact of opening the new airport in Praia, with more international flights.

Due to increased fuel prices, and also housing, inflation remained flat, standing at -0.02% in September, the BCV report said. (macauhub)