Two years ago, I wrote my last article, and I had no intention to restart writing on the DRC economy for a simple reason: It is too depressing! We usually go from one bad news to another…
In the meantime, I have received several messages from people I know and even from complete strangers that didn’t understand why I stopped and insisted that they would like me to continue writing simple but relevant analyses on our economy. So here we are…
Soooooo did things improve since my last article two years ago? Let’s see…
When we look at the indicators, it is not brilliant. The Congolese Franc went from 1600 to 2000 to the dollar, this represents a 25% depreciation in two years. The inflation rose to 15,704% according to the Central Bank of Congo (BCC) which is quite high. The BCC prime rate rose to 18,75% p.a., making the real interest rate positive for the first time since the inflation started skyrocketing, which is a good thing for investors in Congolese Francs.
I know, I know, you are going to tell me that this is all COVID fault but actually this performance was registered before the pandemic started and I have to admit that since the beginning of the pandemic, the depreciation and the inflation are relatively well contained.
Despite the effects of this pandemic that has destroyed most of the economies in the Western World, it seems that we have managed to avoid our first recession in 20 years!!! Hurray!!! According to the BCC preliminary computation, the GDP should grow by 0,8% in 2020 and by 3,2% in 2021 thanks to a very strong performance of the mining industry (forever our savior unfortunately- read past articles here).
According to a BCC survey, Congolese businessmen are more and more optimistic about the perspectives of the DRC economy, which is a very good sign.
On a good note, the copper hit a nine-year peak of US$8,806.50/t on February the 19th. As you know, DRC is the main producer of the metal in Africa and despite the fact that analysts think the fundamentals behind this surge have disappeared, we expect a positive impact on the meager DRC international reserves that currently stand at US$ 693 million.
In a country where the politics has an immense (usually negative) impact on the economy, we can’t wait to discover the members of the cabinet of the new Prime Minister. The new government is expected in the coming days and its composition as well as its size will give us an indication of the direction we are heading to.
As you can see, I didn’t respond to my own question. I will let each reader respond for himself…
To be continued…
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