The Cape Verdean Gross Domestic Product (GDP) suffered a reduction of 14,8% during 2020, as a result of the significative covid19 impacts to an economy heavily dependent of travels, tourism and accommodation sectors, as per data recently release.
After two years of consecutive economic growth (2019: 5,7% and 2018: 4,6%), Cape Verde received less 610 thousand visitors when compared with the 819 thousand back in 2019, fact that led to a reduction of labour force allocated to tourism sector, which fall by a massive 83% against 2019, with most of these workers backed by the layoff scheme assuring 70% of salaries paid with Government contributions.
After one year with almost no commercial and charter flights supporting regular visitor inflow, Cape Verde aims for a steady return of economic activities during 2021, with IMF targeting a 5,8% growth for 2021. Nevertheless, and according to the 3rd review report on Policy Coordination Instrument (PCI), IMF warns of “uncertainties” on the duration of the pandemic, which continue to weigh on the archipelago’s economy, dependent on the resumption of tourism, which threatens the economic recovery expected in 2021.
As per IMF, measures to mitigate the consequences of covid-19 – lines of credit, default on bank loans and tax payments, simplified lay-offs or subsidies to families – “must continue to be monitored closely and eliminated when conditions allow it”, with since state-guaranteed loan facilities supported more than 500 companies, protecting close to 12,300 jobs with €35.2M granted mostly to micro, small and medium-sized enterprises. Equally the simplified lay-offs (suspension of employment contracts), cost Cape Verdean State close to 2.6 million euros) safeguarding close to 32,000 workers.
Despite covid19 impact, Cape Verde has been capable to attract various investment expressions of interest, with the recent announcement of a four stars “Radisson Praia & Conference” an 18 floor building to be located by the Gamboa bay, with a total investment close to €135M, to be added to a significative set of new projects of top tier developer and operators.
With parliamentary elections scheduled to April 18th, Cape Verde anxious look for a steady and sustainable economic growth, allowing the country to reposition on the global travel and tourism landscape.