Cabo Verde’s 7.3% GDP Growth in Q3 2025: Industry and Public Investment Take the Lead

Cabo Verde delivered a robust economic performance in the third quarter of 2025, recording GDP growth of 7.3% year-on-year. This strong expansion highlights the country’s growing economic resilience and reflects the impact of targeted investments, sectoral momentum, and increased public activity. Unlike periods where growth was driven primarily by tourism or external demand, the Q3 2025 results point to a domestically anchored expansion, led by industry, infrastructure development, and public administration.

Industry as the Main Growth Engine

The standout contributor to Cabo Verde’s economic growth was the industrial sector, which benefited from exceptional performance in both manufacturing and construction.

Manufacturing output expanded by approximately 15% year-on-year, providing a substantial boost to industrial value added and overall GDP. This growth reflects improved productive capacity, stronger domestic demand, and gradual diversification within the industrial base. Manufacturing’s performance is particularly significant, as it supports employment, strengthens supply chains, and reduces dependence on imports over the medium term.

At the same time, construction activity surged by more than 17%, driven by ongoing infrastructure projects, residential developments, and public works across the islands. This expansion signals strong investment momentum and continued efforts to modernise transport links, public facilities, and urban infrastructure key foundations for long-term economic competitiveness.

Transport and Public Services Support Expansion

Beyond industry, several service sectors played a crucial supporting role in Q3 growth.

Transport and storage grew by roughly 13%, benefiting from increased passenger flows, tourism-related mobility, and logistics services linked to construction and trade. This sector’s performance underscores its importance as a backbone of Cabo Verde’s island-based economy, connecting people, goods, and economic activity across the archipelago.

Public administration activity increased by around 8–9%, reflecting higher government engagement in service delivery, administration, and public programmes. This rise contributed meaningfully to overall services growth and reinforced the role of the public sector as a stabilising force during periods of economic expansion.

Agriculture Contracts Sharply

In contrast to these positive developments, agriculture recorded a sharp contraction, acting as a drag on overall growth. This decline highlights the sector’s vulnerability to structural challenges such as climate conditions, water scarcity, and limited productivity gains. While agriculture represents a smaller share of GDP, its contraction remains economically and socially significant, particularly for rural livelihoods and food security.

The Role of Taxes and Public Demand

Another notable contributor was the increase in net taxes on products, which rose by nearly 12% and added close to two percentage points to GDP growth. This reflects higher economic activity, improved tax collection, and stronger consumption in taxed goods and services.

From a demand-side perspective, public consumption and investment were the primary drivers of growth. Increased government spending and capital formation supported construction, public administration, and related service sectors. These dynamics indicate an expansion led by fiscal activity and domestic investment rather than external markets.

External Trade: A Neutral Influence

Despite strong headline growth, external trade did not contribute positively in Q3 2025. Exports declined while imports increased, resulting in a negative net trade contribution. This pattern suggests that domestic demand rather than export-led growth was the dominant force behind economic expansion during the quarter.

What This Means for Cabo Verde

Cabo Verde’s Q3 2025 GDP performance signals a shift toward more diversified and investment-driven growth, with industry, infrastructure, and public services playing central roles. While challenges remain particularly in agriculture and external competitiveness the data point to strengthening domestic economic fundamentals.

Sustaining this momentum will depend on continued investment in productive sectors, addressing structural weaknesses in agriculture, and gradually rebalancing growth toward exports and private-sector-led activity. Nonetheless, the Q3 results underscore Cabo Verde’s capacity to generate strong growth through targeted policy, public investment, and sectoral development.