2014-03-17 07:05:02 - Democratic Republic of the Congo Business Forecast Report Q1 2014 - a new country guide report on companiesandmarkets.com
The victory won by Congolese and UN troops over the M23 rebels in North Kivu is an important step in reinforcing government control over the often lawless province. While the successful campaign was an impressive show of force, analysts stress that it does not address the structural causes of instability in the eastern DRC.
Real GDP growth will slow to 7.4% in 2014, but remain relatively robust over the coming years. Private consumption will be a key driver of economic expansion, though rising incomes will keep import demand high.
Slowing revenue growth and high government spending levels will cause the DRC´s fiscal balance to deteriorate. We predict that the budget shortfall will be worth 5.2% of GDP in 2014, increasing to 6.9%
Inflation will remain low in 2014, but we doubt that the central bank´s November 2013 rate cut will stimulate the economy given the Congolese banking sector´s weak links to the real economy.
Proposed hydroelectric dams on the Congo River could transform the DRC´s economy, but we believe that technical, political, and economic challenges will prevent this potential from being fully realised.
Major Forecast Changes
We have upgraded our real GDP forecasts for 2014 from 6.0% to 7.4% due to higher government spending and positive figures from the DRC´s economically critical mining sector.
We expect that the government´s ability to enforce its authority in outlying areas will remain weak, and we predict that political tensions will increase during the lead-up to presidential elections in 2016.
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