Congo, The Democratic Republic Of The

major macro economic indicators

(e): Estimate (f): Forecast

RISK ASSESSMENT

Economic momentum linked to the mining sector

The country will continue to enjoy brisk economic growth, which is still essentially driven by the mining sector (nearly 20% of GDP), which mainly extracts copper and cobalt. Copper production will increase thanks to a rise in extraction capacity and strong global demand, particularly from China. The Kamoa-Kakula mine (operated by Canada's Ivanhoe Mines in association with China's Zijin Mining Group and the state), which produced its first concentrates in mid-2021, will see production capacity increased to 600,000 tonnes a year, making it the second-largest copper mine in the world. The Kipushi zinc and copper mine, also operated by Ivanhoe Mines in association with state-owned Gecamines, will restart in 2024. In addition, the country will benefit from strong global demand for copper, particularly from China, its largest export market, which accounts for around 40% of mining exports. China's growing demand for minerals, particularly copper, stems from the needs associated with the manufacture of electric vehicles and the deployment of the renewable energy sector. These factors, combined with durably high prices for mining products, will support mining exports (around 80% of the country's exports). They will be all the more important as exports of cobalt and copper from the Tenke Fugurume mine, which had been shut down for ten months (as a result of a financial disagreement between the operator, China Molybdenum, and its associate, the state-owned company Gecamines), resumed in March 2023 and will therefore be on the rise in 2024. The contribution of exports to growth will be reduced by imports, which will remain high due to structural dependence on certain imported products (food and oil products in particular) and the need for capital goods for infrastructure and mining projects. The economy will remain undiversified, with poor governance continuing to limit investment in the non-mineral sector. Inflation, which rose to a particularly high level in 2023 (19% in April) as a result of the depreciation of the Congolese franc caused by the fall in copper and cobalt prices (thereby making imported goods, particularly petroleum products, more expensive), should ease in 2024 as a result of several factors, i.e., the restrictive monetary policy (key rate raised to 11% in June 2023) will continue to have an impact, global food prices will continue to moderate, and the depreciation of the currency should be mitigated by the return to higher copper and cobalt prices. Although inflation remains above the 7% target, its fall will ease the burden of imports and support household purchasing power, and thus boost consumption (83% of GDP in 2021). However, the country will still have to contend with a high poverty rate (extreme poverty estimated at 60.5% of the population in 2023) and the humanitarian impact of the conflict raging in the east of the country.

Slight reduction in twin deficits

The budget deficit is expected to fall in 2024 thanks to the rise in mining revenues (around 30% of total revenues) and the reduction in certain short-term expenses, including expenses relating to the presidential elections, which will be held in December 2023. The reform programme under the IMF's Extended Credit Facility will continue from 2021 until mid-2024. However, the reduction in the deficit will continue to be held back by the continuing high level of spending on defence and security given the ongoing conflict in the east of the country. This is accompanied by spending to mitigate the humanitarian impact of the conflict. Financial assistance from the IMF will enable part of the deficit to be financed and will encourage recourse to other concessional financing.

The current account deficit, which will be widened in 2023 by the higher cost of imports linked to the depreciation of the Congolese franc, will narrow thanks to an increase in the trade surplus, made possible by higher mining export revenues and lower import costs. Imports of services will remain high, given the need for services related to infrastructure projects and mining expansion. The deficit will be financed by concessional loans and FDI in the mining sector.

A tense political and security context in the run-up to the December 2023 elections

The presidential, legislative and regional elections, due to be held in December 2023, will put Felix Tshisekedi's position as President back on the line and bring to an end the "Sacred Union of the Nation" government, in place since 2021, led by Prime Minister Sama Lukonde and supported by an eponymous coalition of 24 parties. The main candidates for the presidency include the incumbent President, who is backed by a large number of majority party leaders, the opponent Martin Fayulu and Moïse Katumbi, a former ally of Tshisekedi, who is expected to be in the best position to beat him. The various elections will take place amid a tense political climate, with the opposition criticising the fairness of the electoral process; a tense security climate, with armed conflicts in the east of the country (North Kivu, lturi and South Kivu) and the presence of the Mobondo militia in the west of the country (in the provinces neighbouring Kinshasa); and a tense social climate, after a year of high inflation and with poverty still very high. Uncertainty persists as to whether the elections will be held in December at all and whether there is a risk of a "landslide" vote (like the previous elections, which were postponed for two years), given the long and complex process involved in organising three simultaneous elections in a tense political and security landscape. However, in July 2023, the Céni (Independent National Electoral Commission) confirmed that the elections would be held in December. Relations with neighbouring countries will remain centred on regional military cooperation (with the countries of the East African Community in particular), but tensions between the country and Rwanda will remain high due to reciprocal allegations of support for various rebel groups. Against this backdrop, the country's political situation in 2024 is fraught with uncertainty, and major humanitarian and social issues.

Last updated: September 2023