An increased likelihood of continued political risk in 2017 will keep real GDP growth below its historic trend in the Democratic Republic of the Congo over the next 18 months. Weak investment due to political instability will compound the effect of another year of low copper prices, as inflation driven by a weakening exchange rate weighs on production incentives.
The Democratic Republic of the Congo will face a challenging fiscal position over the coming quarters as the president's disregard for the country's constitution sees donor states begin to scrutinise their contributions to the budget. This will be compounded by weak revenues from the copper sector, which will continue to struggle in a climate of low prices.
The Democratic Republic of the Congo's external accounts will remain a challenging headwind to the wider economy over the coming quarters, as elevated levels of political risk and weak export revenues dampen inflows of capital. A lack of hard currency entering the economy will be reflected in downside pressure on the Congolese franc, as it responds to excessive import demand.
Higher inflation in the wake of the recent sell-off of the Congolese franc will force the Democratic Republic of the Congo to shift toward more hawkish monetary policy in the months ahead. We now expect the central bank to hike the key lending rate by 150 basis points before year-end 2016, keeping rates stable over 2017.
We maintain our view that the Democratic Republic of the Congo will not hold a presidential election as originally scheduled in November 2016, prolonging political uncertainty and instability. Political risk will deter would-be investors until well after President Joseph Kabila's ouster or the unlikely acquiescence of the opposition.
More donors could withdraw funding on the back of the president's disregard for the country's constitution, prompting deeper shortfalls in the government's fiscal position and inflows of foreign capital.
|e/f = BMI estimate/forecast. Source: National Sources/BMI|
|Real GDP growth, % y-o-y||9.5||7.0||4.4||6.6|
|Nominal GDP, USDbn||36.0||39.6||41.4||46.2|
|Consumer price inflation, % y-o-y, eop||1.0||1.6||5.5||4.8|
|Exchange rate CDF/USD, eop||911.00||925.00||1,050.00||1,100.00|
|Budget balance, % of GDP||-3.5||-4.0||-5.5||-5.2|
|Current account balance, % of GDP||-10.1||-10.8||-10.4||-8.1|
Assess your risk exposure in Congo, Dem. Rep. with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Congo, Dem. Rep. with confidence.
Your subscription service includes:
- Delivery of the report in print and PDF
- Online access for 12 months
- The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
- The ability to export data and graphs from the online report directly into your workflow
- The support of a dedicated Account Manager to answer any questions you might have about your subscription
- Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report