1. Market Research
  2. > Materials
  3. > Metals Market Trends
  4. > Democratic Republic of the Congo Country Risk Report Q4 2016

Democratic Republic of the Congo Country Risk Report Q4 2016

  • September 2016
  • -
  • Business Monitor International
  • -
  • 37 pages

Core Views

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 presidents disregard for the countrys 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 Congos 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 sell-off of the Congolese franc will force the Democratic Republic of the Congo to shift towards 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 Kabilas is ousted or the unlikely acquiescence of the opposition.

Table Of Contents

Democratic Republic of the Congo Country Risk Report Q4 2016
Executive Summary.................................................................................................................................. 5
Core Views.......................................................................................................................................................................................5
Key Risks.........................................................................................................................................................................................5
Chapter 1: Economic Outlook.................................................................................................................. 7
SWOT Analysis........................................................................................................................................................... 7
BMI Economic Risk Index.......................................................................................................................................... 7
Economic Growth Outlook........................................................................................................................................ 8
Growth Will Remain Below Trend On Heightened Political Risk................................................................................................8
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.
GDP By Expenditure Outlook.................................................................................................................................... 9
TABLE: GDP GROWTH FORECASTS......................................................................................................................................................................9
TABLE: PRIVATE CONSUMPTION FORECASTS....................................................................................................................................................9
TABLE: GOVERNMENT CONSUMPTION FORECASTS.......................................................................................................................................10
TABLE: FIXED INVESTMENT FORECASTS..........................................................................................................................................................10
TABLE: NET EXPORTS FORECASTS....................................................................................................................................................................10
Fiscal Policy And Public Debt Outlook.................................................................................................................. 11
Budget Deficit Deepens On Rising Political Risk.......................................................................................................................11
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.
Structural Fiscal Position........................................................................................................................................ 12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES.............................................................................................................................12
TABLE: FISCAL AND PUBLIC DEBT FORECASTS...............................................................................................................................................13
External Trade And Investment Outlook................................................................................................................ 13
Slowing Capital Inflows Will Weigh On Currency......................................................................................................................13
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.
Outlook On External Position.................................................................................................................................. 14
TABLE: CURRENT ACCOUNT BALANCE FORECASTS.......................................................................................................................................15
TABLE: TOP 5 GOODS EXPORTS IN 2014...........................................................................................................................................................16
TABLE: TOP 5 GOODS IMPORTS IN 2014............................................................................................................................................................16
Monetary Policy ....................................................................................................................................................... 17
Franc Sell-Off Will Prompt Monetary Tightening........................................................................................................................17
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.
Monetary Policy Framework.................................................................................................................................... 18
TABLE: MONETARY POLICY FORECASTS..........................................................................................................................................................18
Chapter 2: 10-Year Forecast................................................................................................................... 21
The DRC Economy To 2025..................................................................................................................................... 21
Size Will Prove A Double-Edged Sword......................................................................................................................................21
While the sheer enormity of the Democratic Republic of the Congo will help drive economic growth via a large population and wide
resource base, it will weigh on the development of non-extractive sectors due to the challenges of developing adequate infrastructure
and state control over such a large territory.
TABLE: LONG-TERM MACROECONOMIC FORECASTS.....................................................................................................................................21
Chapter 3: Political Outlook................................................................................................................... 25
SWOT Analysis......................................................................................................................................................... 25
BMI Political Risk Index........................................................................................................................................... 25
Domestic Politics..................................................................................................................................................... 26
A Long Road Back To Relative Stability.....................................................................................................................................26
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 is ousted or the unlikely acquiescence of the opposition.
TABLE: POLITICAL OVERVIEW.............................................................................................................................................................................26
Long-Term Political Outlook................................................................................................................................... 27
Structural Weaknesses Will Prolong Instability.........................................................................................................................27
There is little chance that DRC will succeed in overcoming the many structural weaknesses that have made it one of Sub-Saharan
Africa's least stable countries. While the consolidation of power by the central government remains possible, our core scenario is that
Kinshasa's authority over provincial governments will remain limited and that perceived corruption, violence, and poor institutions
will continue to characterise the DRC at the local level. A return to the civil war and anarchy of the 1990s is unlikely, but remains a
risk.
Chapter 4: Operational Risk................................................................................................................... 31
SWOT Analysis......................................................................................................................................................... 31
Chapter 5: BMI Global Macro Outlook................................................................................................... 33
Global Macro Outlook.............................................................................................................................................. 33
EMs Past The Worst, But Structural Problems Persist.............................................................................................................33
TABLE: GLOBAL ASSUMPTIONS..........................................................................................................................................................................33
TABLE: DEVELOPED STATES - REAL GDP GROWTH, %..................................................................................................................................34
TABLE: EMERGING MARKETS - REAL GDP GROWTH, %.................................................................................................................................35
TABLE: MACROECONOMIC DATA and FORECASTS..............................................................................................................................................37

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Ahmad

+1 718 618 4302

Purchase Reports From Reputable Market Research Publishers
Nickel Profile, Bar and Rod Markets in the World to 2020 - Market Size, Development, and Forecasts

Nickel Profile, Bar and Rod Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The expansion of the global nickel profile, bar and rod industry is forecast to reach 2.6% p.a. in the coming years. Between 2009 and 2015 the market increased with an average annual growth of 2.7%. Currently, ...

Copper Markets in the World to 2020 - Market Size, Development, and Forecasts

Copper Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The expansion of the global copper industry is forecast to reach 4.2% p.a. in the coming years. Between 2009 and 2015 the market increased with an average annual growth of 5.0%. Currently, copper sheets ...

Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts

Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts

  • $ 20469
  • Industry report
  • September 2016
  • by Global Research & Data Services

The report package Copper Sheet and Plate Markets in the World to 2020 - Market Size, Development, and Forecasts offers the most up-to-date industry data on the actual market situation, and future outlook ...


ref:plp2016

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.