- Middle-income nation Cape Verde is continuing its strong economic growth, new statistic figures reveal. This year and last year, economic growth is set at around 7 percent annually, with a booming tourism industry providing for most of the growth.
According to Maitland MacFarlan, head of an International Monetary Fund (IMF) mission that ended its 11-day visit to Cape Verde today, the archipelago's economic and policy performance "remains sound." According to the latest economic analyses, GDP growth in 2006 appears to have been higher than expected earlier - possibly around 6.5 percent, Mr MacFarlan revealed.
"Growth in 2007 is expected to be close to 7 percent and, given the large investment projects in the pipeline, the economic outlook is promising," he said, adding that "inflation is expected to decline substantially in 2007 and reach low single-digit levels by the end of the year."
The IMF mission concluded that Cape Verde's strong economic growth mainly had been supported by "strong public and private investment, together with a sharp pickup in tourist arrivals." Also most of the massive investments had been related to the tourist sector, including infrastructure.
The IMF's conclusions are sustained by Cape Verde authorities. According to a statement late last year by the spokeswoman of the Praia cabinet, Cristina Fontes Lima, the numbers of tourist arrivals from 2006 were set to increase at an annual rate of 22 percent. This had been revealed by the National Statistics Institute (INE).
INE projections had further suggested that by 2015, around one million tourists would visit the archipelago annually. "This means that the sector could start contributing with 30 percent to the Gross Domestic Product (GDP) in contrast to the current 10 percent," Ms Lima said, adding that "continuing the dynamic development of the sector, it could employ 53,000 people, demonstrating that there will be more economic growth and more employment."
The cabinet spokeswoman further revealed that in 2006 alone, Cape Verde authorities had approved of investment projects totalling US$ 300 million, "which remains a promising indicator" of economic growth. A great part of these approved investments had been in the booming tourism sector.
The IMF today said it was optimistic on further growth and investments in Cape Verde. While the archipelago already had proven a lucrative place for foreign investors, the Fund nevertheless urged Praia authorities to keep moving forward on economic reforms. In particular the tax code - which holds a complex system of tax exemptions - urgently needed reform, Mr MacFarlan noted.
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