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Congo Economic Outlook
Macroeconomic performance and outlook
Congo’s economic growth has remained on track despite a still weak domestic environment. The growth upturn in 2018 (1.6%) accelerated slightly in 2019 to 2.2%, attributable to the oil sector, which grew 5.5%, and construction and public works, up by 0.8%.
Inflation remains contained below the community target at an estimated 1.8% in 2019 versus 1.2% in 2018, in line with the fiscal adjustment and the continuing implementation of a prudent monetary policy.
Efforts to consolidate fiscal and foreign accounts as part of the CEMAC regional economic and financial reform program produced a fiscal surplus of 8.8% of GDP in 2019 (from 6.8% in 2018) and a current account surplus of 8% of GDP in 2019 (from 6.7% in 2018).
The debt ratio was 88% of GDP including 62% for external debt, despite a restructuring obtained from China. Facing problems servicing its debt, the country had arrears climb to 21% of GDP in 2019, from 8% in 2018.
The social situation is marked by persistent poverty (40.9%) and income inequality (with a Gini index of 0.46 in 2011). The local workforce is characterized by inadequate training relative to labor market needs, explained by the meager availability of technical and vocational training.
Tailwinds and headwinds
Congo’s economic prospects will be marked by the implementation of the National Development Plan 2018–22 and reforms under the IMF’s Extended Credit Facility. Real GDP growth is expected to be 4.6% for 2020 and 1.8% for 2021. The fiscal and current account balances should remain in surplus, thanks to fiscal and external consolidation. Inflation should remain contained at an average of 2.2% over the next two years. These prospects will be supported by continuing reforms, dividends from investments, and economic diversification.
Congo has major agricultural potential as well as enormous natural resources not yet fully exploited (oil, iron, lead, zinc, potash, copper, uranium, diamonds, phosphates, magnesium, and hydropower).
The economy remains heavily dependent on the oil sector, which accounts for 55% of GDP, 85% of exports, and 80% of tax revenue.
Two factors are having a negative impact on business productivity: the lack of stable, high-quality electricity supply, and the length of time to process requests to connect to the grid. And the slowness in paying the country’s domestic debt could jeopardize economic recovery. Better debt management remains a major challenge. The debt viability analysis by the IMF in 2017 concluded that the country was suffering from a debt overhang. Similar to the restructuring agreement with China, one is necessary with trade creditors to ensure debt’s viability in the long term.