2013-01-01 00:01:53 - Democratic Republic of the Congo Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com

We expect the Democratic Republic of the Congo (DRC) to experience relatively robust growth over the duration of our 2012-2016 forecast period. This is primarily due to the expansion of the mining sector. Domestic consumption will also increase, though it will shrink as a portion of GDP. With its weak infrastructure, poor governance and widespread corruption, the DRC is and will remain one of the most difficult places to do business. We believe that the central government will continue to attempt to make reforms, but that the situation on the ground is unlikely to change dramatically. Security risks are likely to remain concentrated in the east, and pose a relatively minor risk to other regions.

Major Forecast Changes

We have downgraded

 

 

our real GDP growth forecast for 2012 from 6.8% to 6.0% on the back of new export figures and rising insecurity in North Kivu. New data indicate that the DRC´s current account deficit was larger than we believed in 2010 and 2011. This deficit will slowly narrow, but we do not anticipate a surplus within our forecast period.

Key Risks To Outlook

Dependence on the copper sector makes the DRC highly vulnerable to market corrections in the price of the metal, which is itself highly dependent on Chinese demand. BMI is predicting an economic slowdown in China this year, but a faster-than-expected deceleration would cause us to alter our forecast While we believe that the security crisis in North Kivu is likely to remain contained, the government´s inability to respond effectively to a relatively minor rebellion is reducing confidence in the state´s ability to assure stability across the country.

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