Congo Slashes Growth Forecast After Drop in Copper Productionby
The Democratic Republic of Congo cut its growth forecast for 2016 for the third time this year because of lower commodity prices and warned the economy could slow further if other industries don’t perform.
The government “has duly noted the slowdown in economic growth in the DRC” in the first half, Prime Minister Augustin Matata Ponyo’s office said in a statement e-mailed from the capital, Kinshasa, on Thursday. It lowered the estimate for growth this year to 4.3 percent.
Congo is Africa’s biggest copper producer and the world’s largest source of cobalt. The central African nation depends on mining, oil and gas revenue for 22 percent of gross domestic product and 95 percent of export earnings, which have been curbed by the fall in prices. Copper output dropped 14 percent in the first half, as cobalt production fell 13 percent.
The government first cut its growth forecast in April from 9 percent to 6.6 percent, reducing it again to 5.3 percent in June. The economy grew 6.9 percent last year.
The latest forecast was made “subject to an improvement in production statistics in the telecommunications sector,” Ponyo’s office said in the statement that followed a weekly meeting Aug. 15 between him and the ministers of budget, economy and finance and the governor of the central bank.
In May, the government slashed its budget by 22 percent to compensate for the loss of earnings from commodities, but has struggled to balance its books. That’s caused the franc to weaken.
Despite intervention by the central bank to protect the value of the currency by selling dollars into the market on at least three occasions, the franc has declined 9 percent since the start of the year to 1,014 per dollar, the first time the official exchange rate has weakened below the 1,000 level, according to central bank data. On the parallel market, the currency has declined to an average of 1,068 per dollar, according to Ponyo’s office.