Cape Verde’s economic activity slowed in 1st half-year

27 September 2013

Economic activity in Cape Verde slowed in the first half of 2013, the island country’s central bank reported in its June financial stability bulletin.

In the bulletin’s executive summary the Bank of Cape Verde indicates that the unfavourable progression of economic activity affected the private sector’s financial position and increased risk affecting the country’s financial stability.

The document adds that Cape Verde continues to suffer from the contracting economy of its main partners and that the economy’s unfavourable performance heightens risk in the scope of financial stability, making it harder to obtain credit.

In line with the adverse situation abroad, the external accounts indicate that the balance of payments performed less favourably during the half-year, compared to the first six months of 2012. But the risk of exchange rate devaluation remained low, given that exchange rate reserves guarantee more than four months of expected imports in 2013.

Banks lent less and tried to attract more resources from clients, thereby contributing to slower growth in the banking sector.

Lower lending and higher deposits helped push up banking system liquidity, though net interest income fell 2 percent, banking income 4 percent and net income 74 percent, while return on assets and equity capital performed similarly. The risks were therefore higher for financial stability, despite increased liquidity. (macauhub)