BCV data shows acceleration of growth in February
BCV data shows acceleration of growth in FebruaryThe internal demand indicator released by the Bank of Cape Verde shows a faster pace of economic growth in the first two months of this year. The gross fixed capital formation (GFCF) indicator indicates that this acceleration reinforces the recovery trend, exhibiting some stabilization in growth since November 2014.
The dynamism of this index is supported by increases in imports of construction goods and equipment, driven by public and external investments. Domestic financing conditions continued to decline negatively for the domestic private sector, while the external indicators of the euro financial markets continued to show a slight easing of restrictions.
According to the BCV, the consumption indicator maintained the recovery trend that had been evident since the end of 2014, supported by the consumption of durable goods. Maintaining a scenario of consumer price contraction favored households’ purchasing power, however, the drop in remittances from emigrants would have had a mitigating effect on the propensity to consume private individuals in the period.
The external demand indicator accentuated the deteriorating trend, with the continuous increase in merchandise imports, the persistent reduction of tourism revenues and the fall in merchandise exports. Consumer prices have remained in deflation. After registering in January, for the first time since March 2014 positive values (0.1 percent), annual inflation fell to -0.2 percent, influenced by fuel prices.
Pressures on consumer prices were due to the more negative contribution of the energy component of the CPI (-13.2 per cent), as a consequence of the recent drop in international oil prices reflected in the transport (by five percent) and housing, water, electricity, gas and other fuels (-3.9 percent).
Although they did not compensate for falling energy prices, inflationary pressures in non-energy classes intensified, with positive contributions from food and non-alcoholic beverages (0.6 percent). There are also contributions from the accessory classes, domestic equipment and maintenance of housing (4.2 percent), leisure, recreation and culture (1.8 percent) and hotels, restaurants, cafes and similar (1.8 percent) .
The consumption indicator maintained the recovery trend that had been evident since the end of 2014, supported by the evolution of durable goods. The maintenance of a scenario of consumer price contraction favored households’ purchasing power, however, the drop in remittances of emigrants would have had a mitigating effect on the propensity to consume of individuals in the period.
Decrease in tourism revenues
Tourism receipts from banks declined by 19.1 per cent, despite the increase in supply capacity and prices in the sector. Structural constraints (infrastructure, tax burden and supply diversification), which limit the ability of national operators to compete with other markets, may be contributing to these results.
In turn, merchandise exports continued the downward trend started last December, due to the reduction in fish exports. The reduction in exports is mainly reflecting the base effect of an extraordinary increase in sea products exported in the same period of the previous year, reverting external demand to the levels normally recorded in that period.
The transfers have evolved positively, driven by donations to the State of Cape Verde to support the victims of the volcanic eruption. Official transfers increased by 89.9 percent in February, with the recovery trend continuing in December. Emigrants’ remittances in foreign currency fell 2.3 percent.
This decrease was mainly due to the decline in the sending of money from migrants living in France (7.7 percent), the United States (6.9 percent) and the Netherlands (4.8 percent), despite improvements in the labor market and economic activity in these countries and the appreciation of the United States dollar.
In the financial account, the available interim information suggests the continuation of the recovery trend in foreign direct investment initiated in September 2014. FDI inflows have increased by around 7.5 per cent, especially driven by emigrant investments, since and other holdings and real estate investments declined over the period.
In turn, the net disbursements of external public debt decreased (75.8 percent). Reflecting the evolution of the trade and financial balances, the growth of the country’s net international reserves registered a strong slowdown. As a result, on 28 February, reserves stood at 48,401.61 million escudos, allowing for 5.3 months of projected imports in 2015.
Source: A Semana