Cabo Verde: Unlocking Inclusive Growth Through Increased Resilience and Equal Opportunities – World Bank

Economic Recovery and Sustainable Development in Cabo Verde

Overview of Economic Growth and Inflation

In 2024, Cabo Verde’s economy demonstrated a robust recovery with an estimated real GDP growth of 7.3%. This growth was primarily driven by a significant increase in tourist arrivals and the first positive agricultural season in several years. Inflation decreased to 1%, marking its lowest level in recent history. This reduction in inflation supported real income growth and contributed to lowering poverty rates below pre-pandemic levels, aligning with the Sustainable Development Goal (SDG) 1: No Poverty.

Key Economic Drivers and Fiscal Performance

1. Tourism Sector: The services sector, especially tourism, accounted for over 70% of economic expansion in 2024. Tourist arrivals increased by 16.5%, reaching 1.18 million visitors, with a growing preference for non-traditional accommodations such as apart hotels.
2. Agriculture Sector: After years of drought, agriculture experienced a notable rebound, contributing to food security and sustainable agricultural practices (SDG 2: Zero Hunger).
3. Inflation and Fiscal Deficit: Inflation fell sharply to 1.0%, driven by lower global food and fuel prices, easing the cost of living. The fiscal deficit widened slightly to 1.1% of GDP due to improved investment budget execution. Despite this, central government debt declined to 110.2% of GDP, and the current account recorded a surplus of 3.7% of GDP for the first time in four years.

Medium-Term Economic Outlook and Risks

• Real GDP growth is projected at 5.9% in 2025, with a medium-term trend near 5%.
• Fiscal consolidation efforts are expected to reduce the fiscal deficit to 0.6% of GDP and public debt to 93.9% by 2027.
• Significant risks include vulnerability to external demand fluctuations, commodity price volatility, climate-related hazards (SDG 13: Climate Action), and potential political pressures ahead of the 2026 elections that may slow reforms.

Advancing Gender Equality for Inclusive and Sustainable Growth

Labor Market Challenges for Women

Despite progress in health and education, Cabo Verdean women continue to face labor market barriers. Women earn up to 14.4% less than men and are underrepresented in formal and high-paying sectors. Key constraints include care responsibilities and occupational segregation, which hinder gender equality (SDG 5: Gender Equality).

Economic Benefits of Closing Gender Gaps

The 2025 Cabo Verde Economic Update, titled Unlocking Women’s Economic Potential, highlights that closing gender gaps could increase GDP by up to 12.2%, enhance productivity in sectors such as tourism, and foster female entrepreneurship, thereby promoting inclusive economic growth (SDG 8: Decent Work and Economic Growth).

Policy Recommendations to Empower Women

• Expand access to childcare services and promote flexible work arrangements to support women’s participation in the labor force.
• Promote women’s skills development in Science, Technology, Engineering, and Mathematics (STEM), Technical and Vocational Education and Training (TVET), and emerging sectors such as the green and blue economies (SDG 4: Quality Education; SDG 14: Life Below Water; SDG 7: Affordable and Clean Energy).
• Combat employer discrimination and reshape social norms through targeted awareness campaigns and legal reforms.

Strengthening Institutional and Economic Resilience

Strategic Priorities for Sustainable Development

• Enhance governance and operational efficiency of State-Owned Enterprises (SOEs), with special focus on newly established public entities.
• Maintain fiscal discipline while prioritizing high-impact public investments that support sustainable and inclusive growth.
• Deepen economic diversification by developing sectors such as the blue economy and digital economy, contributing to innovation and environmental sustainability (SDG 9: Industry, Innovation and Infrastructure; SDG 12: Responsible Consumption and Production).
• Implement inclusive policies with a gender-responsive approach to broaden opportunities for all citizens.

Conclusion

Cabo Verde is on a positive trajectory of recovery from recent economic shocks. Continued reform momentum combined with inclusive and sustainable policy choices will enable the country to build a resilient, equitable, and sustainable economy. These efforts will contribute significantly to achieving multiple Sustainable Development Goals, ensuring long-term prosperity for all Cabo Verdeans.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 1: No Poverty – The article discusses poverty reduction to below pre-pandemic levels supported by economic growth and inflation control.
2. SDG 2: Zero Hunger – The rebound in agriculture after years of drought is highlighted.
3. SDG 5: Gender Equality – The article emphasizes closing gender gaps in labor markets and unlocking women’s economic potential.
4. SDG 8: Decent Work and Economic Growth – Strong GDP growth, tourism expansion, and inclusive human capital development are key themes.
5. SDG 9: Industry, Innovation and Infrastructure – Economic diversification including digital economy and STEM skills development is mentioned.
6. SDG 10: Reduced Inequalities – Focus on inclusive policies and reducing gender-based labor market disparities.
7. SDG 12: Responsible Consumption and Production – Fiscal prudence and efficient public investment are discussed.
8. SDG 13: Climate Action – Vulnerability to climate-related hazards and the green/blue economy are referenced.

2. Specific Targets Under Identified SDGs

1. SDG 1 – Target 1.2: Reduce poverty by at least half by 2030. The article notes poverty reduction below pre-pandemic levels.
2. SDG 2 – Target 2.3: Double agricultural productivity and incomes of small-scale food producers. The article mentions the first positive agricultural season in years.
3. SDG 5 – Target 5.5: Ensure women’s full and effective participation and equal opportunities for leadership. The article highlights closing gender gaps and promoting women’s skills development.
4. SDG 8 – Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article reports strong GDP growth rates.
5. SDG 8 – Target 8.5: Achieve full and productive employment and decent work for all women and men. The article discusses labor market barriers and underrepresentation of women.
6. SDG 9 – Target 9.5: Enhance scientific research and upgrade technological capabilities. The article mentions STEM and digital economy development.
7. SDG 10 – Target 10.2: Empower and promote social, economic and political inclusion of all. The article stresses inclusive policies and gender-responsive strategies.
8. SDG 12 – Target 12.7: Promote public procurement practices that are sustainable. The article refers to fiscal discipline and high-impact public investments.
9. SDG 13 – Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards. The article notes vulnerability to climate hazards and green/blue economy promotion.

3. Indicators Mentioned or Implied to Measure Progress

• GDP Growth Rate (SDG 8.1.1): The article provides real GDP growth rates for 2024 (7.3%) and projections for 2025 (5.9%).
• Inflation Rate (SDG 8.5.2): Inflation fell to 1%, supporting real income growth.
• Poverty Headcount Ratio (SDG 1.2.1): Poverty reduction below pre-pandemic levels is reported.
• Tourist Arrivals (linked to SDG 8 and 9): Tourist arrivals increased by 16.5%, indicating economic diversification and growth.
• Gender Wage Gap (SDG 5.5.1): Women earn up to 14.4% less than men, highlighting labor market inequality.
• Female Labor Force Participation Rate (implied under SDG 5.5 and 8.5): Underrepresentation of women in formal and high-paying sectors is noted.
• Fiscal Deficit and Public Debt Ratios (SDG 12.7): Fiscal deficit at 1.1% of GDP and public debt at 110.2%, with projections to improve.
• Current Account Balance (economic stability indicator): Surplus of 3.7% of GDP reported for the first time in four years.
• Agricultural Output (SDG 2.3.1): Positive agricultural season after drought years is mentioned.

4. Table of SDGs, Targets, and Indicators

Source: worldbank.org