Authors

Overview

Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Alexandre Nshue Mokime, Ernest Bamou

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  • The economy did fairly well overall in 2014, with sustained growth of 8.9%, controlled inflation (1.2%) and a virtually-stable exchange rate (slipping 0.1%).
  • Growth should continue in the short and medium term, with favourable external conditions, steady reduction of the infrastructure deficit and expanding investment due to continuing government reforms.
  • Despite these macroeconomic performances, the country still has very high poverty, large development disparities among provinces and weak spatial inclusion due to slow decentralisation and delayed completion of infrastructure projects.

Economic growth of nearly 9% in 2014 was driven by the extractive and manufacturing industries, agriculture, commerce and construction, and benefited from fairly good external demand and quite high raw material prices. The business climate also improved and the infrastructure deficit was reduced. Growth should remain strong in 2015 and 2016 if the domestic political and security situation stays calm and if external conditions remain good. It will be boosted mainly by the extractive and agro-food industries that attract most large-scale investment.

The private sector is still small but its rate of investment has been growing steadily for the past five years. Its prospects have increased with abolition of some taxes, simplified procedures for setting up businesses and importing goods, upgrading of infrastructure and membership of the Organisation for the Harmonisation of Business Law in Africa.

Despite higher world prices for food and oil products in the first half of the year, the macroeconomic situation remained under control in 2014 and inflation was a low 1.2% (compared with an expected 3.7%). The exchange rate of the Congolese franc (CDF) against the US dollar (USD) slipped only 0.1%. These results were due to a cautious macroeconomic policy and a revival of export revenue.

The DRC has made progress towards the 2015 Millennium Goals (MDG) but not enough, with economic performances having a limited effect on overall living conditions. Few jobs are available, especially for young people. Population growth prevents an effective fight against hunger and the government has taken steps to speed up progress towards the first MDG, to eliminate hunger. It has also pledged to support small farmers and build agro-industrial parks. Education and health care indicators progressed but the quality and quantity of these services need to be improved further.

The political debate was dominated by amendment of the national constitution and the elections timetable proposed by the Independent National Electoral Commission. Significant advances were made in restoring security thanks to army operations backed by the UN peace and stabilisation mission, MONUSCO.

The country, geographically isolated by being almost landlocked and having poor infrastructure, has sharp social and economic inequalities among provinces and between urban and rural areas. The government has sought since 2007 to reduce them through decentralisation but this has been quite slow. An infrastructure-building programme has also been launched to develop the country’s economic potential by creating better links among regions, although a proper overall land-use plan has not yet been drafted.

Table 1: Macroeconomic indicators

 20132014(e)2015(p)2016(p)
Real GDP growth8.58.998.2
Real GDP per capita growth66.46.65.7
CPI inflation0.81.21.84.7
Budget balance % GDP-1.7-3.7-3.9-4.6
Current account balance % GDP-10.2-8.4-4.1-4.4

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.

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