International Monetary Fund lowers projection for Cape Verde’s economic growth in 2013

25 April 2013

The International Monetary Fund (IMF) has lowered its projection for Cape Verde’s economic growth in 2013, now estimating growth of 4.1 percent, or a drop of 0.2 percentage points against the previous projection, according to the latest analysis of the archipelago published Tuesday in Washington.

In its regular analysis of the Cape Verdean economy the IMF noted the European crisis and increased competition in tourism as factors that would negatively affect GDP growth in Cape Verde this year.

The IMF noted that growth of Cape Verde’s Gross Domestic Product (GDP) had slowed in 2011 and 2012 (to 5.0 percent and 4.3 percent, respectively) due to a difficult external climate and a drop in internal demand, although tourism has remained flexible and remittances from emigrants have remained high.

The IMF also projected that competition in tourism would increase, with the recovery of north African markets and warned that growth in private remittances was expected to slow due too the economic stagnation of Euro Zone countries.

The IMF noted that increased public debt could put debt servicing at risk and it therefore applauded the government’s plan to launch medium term budget consolidation measures this year.

The rise in public debt, along with “significantly lower” GDP growth led credit rating agency Fitch Ratings this month to lower its long term rating on Cape Verde’s debt in foreign currency from “BB-” to “B+” despite keeping the short terms foreign currency debt rating unchanged at “B”. (macauhub)