Economic growth in the Democratic Republic of the Congo will moderate slightly in 2016, as a weak commodity sector and high levels of political risk continue to weigh on the external sector. Growth will pick up in 2017 as commodity prices begin to recover, but the threat of further escalation or a prolonging of the current political crisis pose a downside risk.
The beginnings of a recovery in oil prices and a gradual weakening of the local currency will see a slight increase in inflation in the Democratic Republic of the Congo over the next 12 months. However, price growth will remain well within the Banque Centrale du Congo's target range of less than 5.0%, meaning interest rates will stay at 2.0%.
The Democratic Republic of the Congo will see its budget deficit peak in 2016, following relatively slow economic growth and low revenues from the country's mining sector as the price of copper falls further. Political turbulence will put further downward pressure on the budget as insecurity increases before a recovery in commodity prices allows for some recovery in 2017.
The deterioration in investor sentiment towards the Democratic Republic of the Congo will lead to a slight narrowing of the current account deficit over the second half of 2016. Even so, the persistence of low copper prices and weak production in key export sectors will limit any recovery in the country's external trade dynamics until conditions begin to improve.
The Democratic Republic of the Congo will continue to see widespread political instability in the approach to its presidential election. The government's delay tactics and lack of preparation mean the election will likely not go ahead as planned, but overwhelming opposition to the incumbent president, Joseph Kabila, will make another term in office impossible.
The copper price remains well below USD5,000/tonne, forcing more mines to cease operations and make redundancies.
A major flare-up in violence as the 2016 elections approach worsens what is already a questionable investment climate.
|e/f = BMI estimate/forecast. Source: National Sources/BMI|
|Nominal GDP, USDbn||36.0||39.7||41.8||46.6|
|Real GDP growth, % y-o-y||9.5||7.3||6.6||7.6|
|Consumer price inflation, % y-o-y, eop||1.0||1.6||2.3||3.2|
|Exchange rate CDF/USD, eop||920.00||925.00||962.86||972.49|
|Budget balance, % of GDP||-3.5||-4.0||-5.5||-5.3|
|Current account balance, % of GDP||-10.1||-10.8||-10.6||-8.3|
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