Market Research Logo

Cape Verde Country Risk Report 2017

Cape Verde Country Risk Report 2017

Core Views

Economic activity in Cape Verde will accelerate over the comingquarters as the country benefits from better-than-expected economicperformance in Europe, which is an important source of remittanceand tourists. However, with the Cape Verdean government in fiscalconsolidation mode, we believe that growth will slow once again asthe bounce in European growth fades.

Cape Verde faces a period of subdued growth over the coming decadein light of persistent structural obstacles, including its dependence ontourist and capital inflows from the EU and the government's limitedability to drive new investment.

Cape Verdean foreign policy will likely pivot towards China over thecoming years as the government looks for ways to stimulate growthand reduce unemployment. However, such a pivot risks increasingpopular frustrations if Chinese involvement in the economy is perceivedto come at the expense of ordinary Cape Verdeans.

Gradual fiscal consolidation, coupled with at least moderate growth,will see the country's public sector debt burden slowly begin to fall.Although debt levels will remain high, the generous terms of thecountry's public sector debt will support debt and external accountsustainability.

Robust institutions, well developed democratic norms and minimalcorruption will support political stability.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Temporary Pick-Up In Economic Growth On European Bounce
Economic activity in Cape Verde will accelerate over the coming quarters as the country benefits from better-than-expected economic
performance in Europe, which is an important source of remittance and tourists. However, with the Cape Verdean government in fiscal
consolidation mode, we believe that growth will slow once again as the bounce in European growth fades.
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
External Accounts Supported By Concessionary Lending
Cape Verde will remain reliant on external financing to fund its sizable current account shortfall in the coming years. While much of this
is debt financing, the concessional nature of the country's obligations will limit risks to its external position.
TABLE: TOP 5 GOODS EXPORTS (2015)
TABLE: TOP 5 GOODS IMPORTS (2015)
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
Monetary Policy
Currency Peg Will Keep Price Growth Constrained
Price growth in Cape Verde will remain constrained over the next decade, supported by the currency's peg to the euro. Structurally
lower commodities prices will further temper inflation.
TABLE: MONETARY POLICY
Fiscal Policy And Public Debt Outlook
Gradual Fiscal Consolidation Will Bring Down Debt Burden
Cape Verde will gradually narrow its fiscal deficits over the coming decade, which, coupled with at least moderate growth, will see the
country's public sector debt burden begin to fall gradually. Although debt levels will remain high, the generous terms of the country's
public sector debt will support debt sustainability.
TABLE: MAIN REVENUE & EXPENDITURE CATEGORIES (2015)
TABLE: FISCAL POLICY
Long-Term Economic Outlook
Structural Obstacles Will Limit Long-Term Growth
Cape Verde faces a period of subdued growth in the coming decade in light of persistent structural obstacles, including its dependence
on tourist and capital inflows from the EU and the government's limited ability to drive new investment. Growth will largely depend on
improvements to the quality of basic services and the promotion of private sector activity.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Contents
Chapter 2: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Closer Integration With China A Possible Avenue For Economic Boost
Cape Verdean foreign policy will likely pivot towards China over the coming years as the government looks for ways to stimulate growth
and reduce unemployment. However, such a pivot risks increasing popular frustrations if Chinese involvement in the economy is
perceived to come at the expense of ordinary Cape Verdeans.
Long-Term Political Outlook
Strong Democratic Norms Support Minimal Risk
Cape Verde will remain among Sub-Saharan Africa's most politically stable economies over the coming decade. Robust institutions,
well developed democratic norms and minimal corruption will support political stability, although structurally slow economic growth will
underpin modest risks to policy continuity.
Chapter 3: Demographic Outlook
Demographic Outlook 2016
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
Chapter 4: BMI Global Macro Outlook
As Good As It Gets?
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: CAPE VERDE – MACROECONOMIC DATA & FORECASTS

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report