AMR: DRC

GDP growth – non-extractive sector still recovering

We revise our GDP growth forecast to 5.5% y/y for 2022 and 5.8% y/y for 2023, from 5.0%  and 5.5% y/y respectively. The extractive sector seems set to drive growth, with the nonextractive sector still in recovery. Preliminary data puts growth at 5.7% y/y for 2021,  supported by favourable base effects following growth of a mere 1.7% y/y in 2020.

Balance of payments – strong export performance

We expect DRC’s current account surplus to reach 0.7% of GDP at end 2022 and 1.7 % of  GDP at end 2023. We had expected the current account to post a surplus in 2021, but it is  estimated to have posted a deficit of just under 1% of GDP. That said, DRC’s terms of trade  have strengthened significantly over the past 2-y, largely as a function of elevated export  receipts from the mining sector. However, this should be somewhat offset by recovering  import growth, combined with a higher fuel import bill.

Monetary policy – hiking cycle imminent

We expect the BCC’s MPC to increase the policy rate by 200 bps within the next 6-m. The  MPC adjusted the policy rate lower by 200 bps in mid-2021, leaving the rate unchanged at  8.5% since then due to underlying inflation being stable. 

FX outlook – USD/CDF holds steady

We forecast the USD/CDF pair to reach 2,013 by end 2022 and 2,053 by end 2023. Strong  export performance should continue supporting the currency’s stability, as would  improvements in onshore FX liquidity conditions.

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