According to forecasts from the International Monetary Fund (IMF), Nigeria’s economy, which held the position of Africa’s largest in 2022, is poised to descend to fourth place this year due to a series of currency devaluations.
The IMF’s World Economic Outlook, as cited by Bloomberg, estimates Nigeria’s gross domestic product (GDP) at $253 billion based on current prices for the year. This places Nigeria behind North African giants Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion.
The report further predicts that South Africa will retain its status as the continent’s largest economy until Egypt reclaims the top spot in 2027. Nigeria, however, is projected to remain in fourth place for the foreseeable future, as indicated by data released this week.
Nigeria has grappled with economic challenges since President Bola Tinubu implemented significant policy reforms, including the cessation of the subsidy regime and the devaluation of the Naira. Despite a recent economic upturn, the Naira remains 50% weaker against the US dollar compared to its value prior to these reforms, following two rounds of currency devaluation.
In contrast, Egypt, one of the world’s emerging economies with substantial debt and the IMF’s second-largest borrower after Argentina, also opted to float its currency. This move led to a nearly 40% decline in the value of the Egyptian pound against the dollar last month, aimed at attracting investment.
Unlike Nigeria’s Naira and Egypt’s pound, the value of South Africa’s rand has traditionally been determined in financial markets. While the rand has experienced a modest 4% depreciation against the dollar this year, South Africa’s economy is anticipated to benefit from improvements in energy supply and initiatives aimed at addressing logistical bottlenecks.
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