The International Monetary Fund raised its growth forecast for real GDP growth in the Democratic Republic of the Congo to 8.5 percent in 2022, owing to increased output in the mining sector, and predicted that it would remain high in 2023.
The Fund, however, stated that the positive growth forecast for 2023 is overshadowed by heightened downside risks from an intensification of the armed conflict in the East, uncertainty in an election year, the prolonged impact of the war in Ukraine, and unfavourable terms-of-trade shocks.
“Advancing structural reforms remains crucial to sustain macroeconomic stability under a challenging environment and to support higher and more sustainable and inclusive growth,” the IMF wrote in a statement following a staff visit led by Mercedes Vera Martin in Kinshasa from February 8 to 14, 2023, to discuss recent economic developments, the economic outlook, and progress on reforms supported by the ongoing Extended Credit Facility (ECF) arrangement.
Martin continued, “Annual inflation reached 13.1 percent at end-2022 on account of higher food, energy, and transport prices. Preliminary data also suggest that the current account deficit widened in 2022, due to strong import growth and deteriorated terms of trade. Despite this deterioration, the Central Bank of Congo (BCC) has reported gross international reserves at US$4.6 billion, about $300 million above the previous projection. The 2022 overall fiscal balance is estimated to have deteriorated as spending increased to address the security situation and arrears repayments.”
According to the United Nations, increased confrontations between the M23, the Congolese army, and numerous other armed groups have forced more than 520,000 people to evacuate their homes. This has exacerbated an already horrific security and humanitarian situation in North Kivu and the larger eastern area. The humanitarian group Médecins Sans Frontières has warned of a potential health calamity as cholera spreads swiftly in displaced people’s camps outside Goma, the provincial seat of North Kivu.
Speaking on the downsides to the 2023 growth forecast, Martin said – “Growth for 2023 is projected at 8 percent, but there are important downside risks from the armed conflict in the East, uncertainty ahead of the elections, the continued effect of the war in Ukraine, and adverse terms-of-trade shocks. In this context, sustaining prudent macroeconomic policies will help bolster resilience to external shocks. Additional revenues would help build fiscal buffers and improving export prices will facilitate building up reserves.
Martin wrote, “Preliminary data show significantly stronger real GDP growth in 2022 than previously anticipated. Growth is now estimated at 8.5 percent, as stronger-than-expected mining production (which grew at about 20 percent) more than compensated for a downward revision to non-extractive growth (to 3.2 percent from 3.9 percent)”.