
Fitch Ratings - Hong Kong - 21 May 2024:
Fitch Ratings has upgraded Cabo Verde's Long-Term Issuer Default Ratings (IDR) to 'B' from 'B-'. The Outlook is Stable.
A full list of rating actions is at the end of this rating action commentary.
Key Rating Drivers

Rating Upgrade: The upgrade reflects Cabo Verde's robust economic growth outlook and strong fiscal performance, which we expect will support fiscal consolidation and a declining government debt trajectory over our forecast horizon. Continued strong growth in the tourism sector, which surpassed its pre-pandemic levels in 2023, will underpin both economic activity and improvement in external finances in terms of narrower current account deficits and adequate levels of international reserves.
Strong Growth Outlook: We forecast growth to remain robust over 2024-2025, averaging 4.7%, from 5.1% in 2023, driven by continued increases in tourist arrivals as well as high level of tourism-related foreign direct investment (FDI). Private consumption will also likely benefit from the strong performance of the tourism sector, which accounts for around 40% of total employment. Household spending will be further supported by declining inflation, to an average 2.0% over 2024-2025 (from 3.7% in 2023), reflecting the normalisation of imported food and fuel prices.
Detailed information can be found below, or directly in the original Fitch article, here.
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