Congo cuts growth forecast to 7.7 pct as copper output falls

Congo cuts growth forecast to 7.7 pct as copper output falls

Nov 23, 2015

 Democratic Republic of Congo lowered its 2015 economic growth forecast to 7.7 percent from an earlier prediction of 8.4 percent due to weak commodity prices and lower mining output, the prime minister's office said in a statement on Monday.

The economy of Africa's largest copper producer grew by 9.5 percent in 2014, according to the government, which had predicted growth of 10.3 percent for 2015 in May.

But demand has been hurt by falling demand for minerals, particularly in top industrial metals consumer China. Three-month copper on the London Metal Exchange hit a fresh 6-1/2 year low on Monday at $4,444 a tonne before recovering slightly to $4,500.

Congo's economy is heavily dependent on the export of raw minerals. Copper and cobalt exports alone accounted for 79 percent of the value of Congo's exports in the first half of 2015, according to the Central Bank.  

In another blow, Swiss-based trading house Glencore began an 18-month suspension of copper and cobalt production at its Katanga Mining unit in the country's southeast in September. 
  
The mine produced about 15 percent of Congo's total copper output prior to its suspension. The country's chamber of mines estimates that the production freeze combined with power shortages will cause output of the metal to fall from 1.03 million tonnes in 2014 to about 980,000 tonnes this year.   

Prime Minister Augustin Matata Ponyo said last month that the mine's suspension would cost the government about $215 million in tax revenues next year.   
 
The statement from Matata Ponyo's office on Monday promised that the government would study measures to diversify the economy, without elaborating further.  

Reuters
Reporting By Aaron Ross; Editing by Dominic Evans