South Africa may overtake Nigeria as Africa’s largest economy- IMF

According to IMF forecasts, South Africa may surpass Nigeria as the continent’s largest economy.

The IMF World Economic Outlook estimates that South Africa, the continent’s most industrialised country, will attain a GDP of $401 billion by 2024.

However, it projected that, at current prices, Nigeria and Egypt would have GDPs of $395 billion and $358 billion, respectively.

IMF added that South Africa was expected to lead the rankings for a year before falling behind Nigeria, the country with the highest population in Africa, once more.

In 2026, the analysis, which was published last week, predicted that South Africa may further deteriorate and occupy the third spot behind Egypt.

This occurs at a time when Nigerian President Bola Tinubu has made some important policy adjustments, along with a fall in oil production that has forced Nigerians to deal with inflation and a decline in the value of the naira.

Read Also:Naira depreciates against the dollar and trades at N848/$ on the official market

In an effort to revive the economy, Tinubu’s administration has eliminated the gasoline subsidy and changed the foreign exchange system, as well as taken measures to address the dollar shortage and increase tax collections.

In Nigeria, those actions are currently painful, but they are anticipated to gain more and more benefits with time.

In contrast to 2023’s 2.9% growth, the IMF forecasts a 3.1% GDP increase for 2019.

According to Daniel Leigh, division leader in the IMF’s research division, the reforms should result in “stronger and more inclusive growth,” he told reporters last week at the fund’s annual meetings in Marrakech, Morocco.

In the near future, Nigeria and Egypt will rise back to the top thanks to crucial economic reforms they have implemented, claims Bloomberg.

“We think the IMF’s predictions accurately reflect its expectations for the locations of significant reforms.

In 2024, South Africa will briefly overtake Nigeria and Egypt as the largest economies in Africa. This will largely be because of Nigeria’s and Egypt’s economies contracting in dollar terms as a result of severe currency devaluations.

The long-term trend, however, indicates that Egypt and Nigeria would eventually reclaim the top rankings, with Nigeria taking a commanding lead.

According to Bloomberg, “Oil output needs to be restored to its potential, insecurity needs to be addressed, and the bottlenecks in the power sector need to be addressed” for Nigeria to achieve the GDP growth predicted by the IMF.