Impact of Covid-19 on the Cabo Verde economy will be more serious than predicted by the IMF

17 April 2020

The forecast of an economic contraction of 4.0% announced by the International Monetary Fund (IMF) for Cabo Verde in 2020 “has already been exceeded,” and the final figures could be “much worse,” wrote the deputy prime minister and minister of Finance on his Facebook page.

“These scenarios have already been exceeded, and the numbers, which are updated at least weekly, may be worse,” wrote Olavo Correia, who gave assurances that the country had enough energy to endure a recovery from the shock.”

The International Monetary Fund (IMF) projects that Cabo Verde will see negative economic growth of 4% this year, accelerating to 5.5% in 2021, with public debt increasing to 132.5% of gross domestic product (GDP) this year.

“The countries with non-intensive resources should see growth slowing from 6.2% to 2.0% and, within this group, the countries heavily dependent on tourism, such as Cabo Verde, São Tomé and Príncipe and the Seychelles, will experience a severe drop, with GDP contracting 5.1% after having grown, on average, by 3.9% in 2019,” said the IMF.

“Sub-Saharan Africa is facing an unprecedented economic and health crisis,” said the report on regional economic prospects in the region, this year focused entirely on the effects of Covid-19 on the continent.

In this even more uncertain context than usual, the IMF forecasts that this region will have negative growth of 1.6%, the highest on record and 5.2 percentage points below the forecast in October, but expects that the continent return to growth in 2021, with GDP expanding, on average, by 4.1%. (macauhub)