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- GDP (PPP):
- $25.3 billion
- 6.9% growth
- 5.8% 5-year compound annual growth
- $348 per capita
- Inflation (CPI):
- FDI Inflow:
The Democratic Republic of Congo (DRC) has an economic freedom score of 39.6, making it the 171st freest economy in the 2013 Index. Its overall score is 1.5 points lower than last year, reflecting significant deterioration in control of government spending that is only partially mitigated by an increase in monetary freedom. The DRC is ranked 44th out of 46 countries in the Sub-Saharan Africa region, and its score is far below the regional average.
The Congo’s extractive industries and exports have generated high nominal rates of economic growth but little sustainable or broad-based development. Political risk remains high, severely undermining prospects for diversified growth and trapping a majority of the population in poverty. Informal economic activity is rampant, and businesses have little recourse in law and little protection for their property.
Government economic activity lacks impact, and the basic supply of public goods, particularly infrastructure, is far below levels necessary to facilitate economic growth and entrepreneurial opportunity. The slow pace of reform, coupled with ongoing political instability, has left the capacity of public institutions inadequate to support private-sector development and long-term economic expansion.
Laurent Kabila, who seized power in 1997, was assassinated in 2001. His son Joseph assumed power and in 2006 won the first multi-party election in 40 years. He was re-elected in December 2011 in a largely flawed and violent election. Rebel groups that include the Lord’s Resistance Army, M23, and the Democratic Forces for the Liberation of Rwanda (FDLR) remain active in the northeastern region. The DRC’s immense natural resources, including copper, cobalt, and diamonds, have fueled conflict rather than development. Political unrest has led foreign businesses to limit their operations, and corruption and mismanagement are disincentives to activity in the formal sector. Infrastructure is practically nonexistent in many areas.
Despite a recently adopted constitution, protection of property rights is hampered by dysfunctional public administration. Enforcement of the complex legal code is selective. Human rights abuses and banditry deter economic activity. A culture of corruption institutionalized during the 30-year tenure of former President Mobutu Sese Seko limits the state’s ability to fulfill essential obligations of government.
The top income tax rate is 30 percent, and the top corporate tax rate is 40 percent. Other taxes include a rental tax and a tax on vehicles. The overall tax burden equals 18.9 percent of total domestic income. Tax enforcement is arbitrary. Government spending equals 36.5 percent of domestic output, and the budget deficit is over 6 percent of GDP. Much of the public debt was cancelled in 2010 under the Heavily Indebted Poor Countries Initiative.
Despite recent efforts to modernize the regulatory framework, launching a business still takes more than the world averages of seven procedures and 30 days. Much of the workforce is employed in the agricultural sector, and informal labor activity is widespread. Many prices are controlled by the state. Inflation is likely to rise due to the central bank’s injection of millions in new banknotes into the economy to fight dollarization.
The trade-weighted average tariff rate is relatively high at 11 percent, and inefficient customs procedures constrain dynamic growth in trade. The investment regime, hampered by government controls, lacks transparency. The private sector suffers from inadequate access to credit, particularly long-term loans, and overall use of financial services is highly constrained. Credit to the private sector amounts to less than 10 percent of GDP.