Cape Verde's isolation, lack of important minerals, and inadequate rainfall are expected to limit progress in the immediate future. There are, however, 2 causes for cautious optimism. The first is that Cape Verde has good prospects for expanding its tourism sector: it is relatively close to Europe for a tropical destination, and it has the priceless benefit of a secure regime and political stability. Cape Verde is aiming for an 8-fold increase in tourism over the next 8 years, and with suitable foreign investment, this is quite achievable. If successful, this growth will provide a major boost to the nation's economy. The second encouraging feature is that Cape Verde has managed to establish manufacturing and exports in leather goods and garments. The low wage rates in Cape Verde, the good educational level of the Cape Verdean work-force, and the proximity to the markets of Europe suggest that this sector of the economy can undergo significant expansion.
As for the foreseeable future, the 2000 budget was approved, but spending exceeded projections in 1999. The World Bank backed a loan to support administrative reform. Inflation has fallen but remains above target. Ties with the Azores have strengthened and the current account deficit doubled between 1997 and 1998. GDP growth estimates have been lowered slightly from 6 percent to 5.5 percent from 2000 to 2001, due to lapses in policy reform. The reduction in the growth rate can be expected to persist until the new government reveals its commitment to the liberalizing process. The election of Pedro Pires as president is unlikely to affect the overall policy of economic liberalization, although the privatization process may be slowed.