Democratic Republic of the Congo Economy - overview

Economy - overview: The economy of the Democratic Republic of the Congo - a nation endowed with vast potential wealth - is slowly recovering from two decades of decline. Conflict that began in August 1998 has dramatically reduced national output and government revenue, increased external debt, and resulted in the deaths of more than 5 million people from violence, famine, and disease. Foreign businesses curtailed operations due to uncertainty about the outcome of the conflict, lack of infrastructure, and the difficult operating environment. Conditions began to improve in late 2002 with the withdrawal of a large portion of the invading foreign troops. The transitional government reopened relations with international financial institutions and international donors, and President KABILA began implementing reforms, although progress has been slow and the International Monetary Fund curtailed their program for the DRC at the end of March 2006 because of fiscal overruns. Much economic activity still occurs in the informal sector, and is not reflected in GDP data. Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position and GDP growth from 2006-2008, however, renewed strife in the second half of 2008, combined with a fall in world market prices for the DRC's key mineral exports inflicted major damage on the economy and halted growth. Government reforms may lead to increased government revenues, outside budget assistance, and foreign direct investment, although an uncertain legal framework, corruption, a lack of transparency in government policy are long-term problems. The DRC government has applied to the IMF for an Exogenous Shock Facility in the amount of $200 million to help it deal with its deteriorating financial situation, and the World Bank will consider a separate $100 million in emergency funding. The global recession probably will cut economic growth in 2009 to half its 2008 level.

Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of September 17, 2009