Democratic Republic of Congo Country Risk Report

Published 23 June 2015 | Quarterly

  • 30 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Democratic Republic of Congo Country Risk Report

Core Views:

  • We forecast that the Democratic Republic of Congo (DRC) will record real GDP growth of 8.5% in 2015. This is an upward revision to our outlook since our last quarterly update - we previously anticipated growth of 7.8% - due largely to strong export figures through the first quarter of the year. Nevertheless, it is slower than the 9.5% forecast by the IMF this year. We believe that the Fund's expectations for growth do not make sufficient allowances for investors fears regarding the country. These will be heightened by ongoing violence in the east of the country; increasing tensions regarding President Joseph Kabila's ambitions for a third term; and a proposed hike to mining royalty taxes. In 2016, we anticipate a slight uptick in growth to 8.9%, as investment and government consumption rises.

  • We stick to our view that the Banque Centrale du Congo (BCC) will maintain its key policy rate at 2.00% through the course of 2015 and into 2016, as laid out in our previous quarterly update. This was vindicated by the bank's latest monetary policy committee (MPC) meeting on May 7, when it elected to keep rates as they stood, citing below-target inflation and a relatively stable currency.

  • We forecast that the DRC's current account deficit will be equivalent to 8.7% of GDP in 2015, a slight narrowing from the deficit of 9.6% of GDP recorded in 2014. Despite global prices for copper - a key export of the Central African country's - remaining depressed, there has been strong growth in production, and we expect that this will continue over the remainder of 2015 and into next year. In 2016, we forecast that the current account deficit will narrow further, to 7.7% of GDP. We do not believe that this deficit - despite being substantial - is cause for concern. Although investor concerns will be heightened thanks to political tensions in the country, we expect that investment inflows will remain sufficient to cover the shortfall.

  • Tensions in the Democratic...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Political Uncertainty To The Fore in 2015
8
TABLE: Political Overview
8
Long-Term Political Outlook
9
Structural Weaknesses Will Prolong Instability
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Private Consumption To Drive Growth
14
TABLE: Economic Activity
14
Fiscal Policy
16
Government Must Widen Tax Base To Realise Investment Plans
16
TABLE: Fiscal Policy
16
Monetary Policy
17
BCC Will Maintain Rates Through 2015
17
Balance Of Payments
19
Current Account Deficit Will Widen Despite Economic Rebasing
19
TABLE: Current Account
20
Chapter 3: BMI Global Macro Outlook
23
Global Outlook
23
Deflationary Pressure
23
Table: Global Assumptions
23
Table: Developed States, Real GDP GrowtH, %
24
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
24
Table: Emergi ng Mark ets , Real GDP Growt h, %
25

The Democratic Republic of Congo Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Congo, Dem. Rep.. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Congo, Dem. Rep.'s economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Congo, Dem. Rep.'s economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Congo, Dem. Rep.'s country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Congo, Dem. Rep., including currency volatility, the commodity price boom and protectionist policies.

The Democratic Republic of Congo Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Congo, Dem. Rep.' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Congo, Dem. Rep. through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Democratic Republic of Congo Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Congo, Dem. Rep. and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Congo, Dem. Rep., sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Congo, Dem. Rep. over the next 5-years?

BMI's Congo, Dem. Rep. country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Congo, Dem. Rep. Market - Political Strengths, Weaknesses, Opportunities and Threats facing Congo, Dem. Rep..
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Congo, Dem. Rep.'s risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Congo, Dem. Rep.’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Congo, Dem. Rep.'s risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Congo, Dem. Rep.?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Congo, Dem. Rep. against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Congo, Dem. Rep.’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express