Country Report Congo (Democratic Republic) December 2008

Outlook for 2009-10

The Economist Intelligence Unit expects the president, Joseph Kabila, to remain in power throughout the forecast period. Political-ethnic unrest is likely to continue in North and South Kivu. China's economic involvement in the country may cause the government to pay less heed to pressure from Western donors. The main sources of growth will be construction, telecommunications and mining, all of which are benefiting from foreign investment. However, investment is slowing because of the world economic downturn, and we expect real GDP growth to fall from 8% in 2008 to 6-7% in 2009-10.

The political scene

Antoine Gizenga has resigned as prime minister and has been succeeded by Adolphe Muzito, the former minister of budget. Most of the old cabinet kept their posts in the subsequent reshuffle, but some underperformers were demoted. Fighting between a Tutsi rebel militia and government forces broke out in North Kivu in late August, drawing in other armed groups, including the UN peacekeeping force. Civilians were the target of rape, pillage and murder by most of the combatant groups. A burst of international diplomatic activity has failed so far to find a lasting solution to the region's instability. Violence has flared up again in Orientale province: in the north the Lord's Resistance Army, a Ugandan rebel group, has attacked Congolese villages, and in Ituri district a new militia has attacked government and UN forces.

Economic policy

Producing a budget for 2009 is the economic policy priority for the new government. The Central Bank has published a fairly downbeat assessment of the country's economic prospects. The US$9bn infrastructure-for-minerals deal with China remains an obstacle to a new arrangement with the IMF. The fall in copper prices may cause the Chinese to re-evaluate the deal.

The domestic economy

According to the Central Bank, copper production in January-August 2008 was 310% higher year on year. Inflation was 24.1% at the end of September. The review of 61 mining contracts is still unfinished. The global financial and econo-mic crisis has begun to curtail investment by mining companies. The diamond parastatal, Societe miniere de Bakwanga (Miba), has secured a loan of US$140m from regional development institutions for rehabilitating its production facilities. An official review proposes the cancellation of 70% of logging contracts.

Foreign trade and payments

The EU is offering development assistance totalling 562m (US$730m) over five years, covering projects in infrastructure, transport, health and governance.

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212