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South Africa is projected to briefly surpass Nigeria and Egypt as the largest economy on the continent next year, International Monetary Fund forecasts reveal.
The IMF’s World Economic Outlook projects South Africa’s gross domestic product to reach US$401 billion in 2024, surpassing Nigeria’s U$395 billion and Egypt’s US$358 billion, all at current prices.
However, this shift is predicted to be temporary, as South Africa is expected to hold the top spot for just one year before trailing Nigeria once more. By 2026, South Africa is projected to fall to third place behind Egypt, as outlined in the report released last week. While IMF data shows Nigeria’s economy has eclipsed South Africa’s since 2018, its fortunes have dimmed along with a decline in production of oil and it has been grappling with runaway inflation and a plunge in the value of the naira, Bloomberg reported.
To achieve the projected GDP expansion as outlined by the IMF, several factors need to be addressed, including restoring oil output to its potential, addressing security concerns, and resolving issues in the power sector.
Since taking office as Nigeria’s president, Bola Tinubu has introduced a series of reforms including the removal of the long-standing expensive fuel subsidy, and consolidation of all forex exchange windows, all aimed at restoring the state’s financial strength.
While these policies were widely acclaimed as necessary, and potentially beneficial in the long run, they have imposed additional burdens on the cost of living for Nigerians. The IMF sees GDP expanding 3,1 percent next year, compared with 2,9 percent in 2023.
On the other hand, Egypt is facing its own set of challenges and has devalued its currency three times since early 2022 in response to a foreign exchange shortage. This has led to the Egyptian pound losing nearly half of its value against the US dollar. -Business Insider Africa
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