South Africa expected to overtake Nigeria as Africa's biggest economy

Daba Finance/South Africa Nigeria economy

AFRICAN BUSINESS AND ECONOMYOctober 17, 2023 at 12:00 PM UTC

International Monetary Fund (IMF) forecasts indicate that South Africa is poised to briefly surpass Nigeria and Egypt as the largest economy on the African continent in the coming year. According to the IMF's World Economic Outlook, South Africa's gross domestic product is expected to reach $401 billion at current prices in 2024, outpacing Nigeria's $395 billion and Egypt's $358 billion.

However, this status is projected to be short-lived, with South Africa anticipated to hold the top position for just a year before slipping behind Nigeria again and subsequently falling to the third position, trailing Egypt in 2026. This analysis comes in light of a report released last week.

While IMF data has shown that Nigeria's economy has exceeded South Africa's since 2018, Nigeria has faced economic challenges due to a decline in oil production, high inflation rates, and a significant depreciation of the naira.

Key Takeaways

Bola Tinubu, who assumed the presidency of Nigeria at the end of May, has announced a series of significant policy changes aimed at restoring the country's financial stability. These changes include an overhaul of the foreign exchange system, the elimination of costly gasoline subsidies, and efforts to address dollar shortages and enhance tax revenue. While these measures are causing initial economic challenges in Africa's most populous nation, they are anticipated to yield long-term benefits. The International Monetary Fund (IMF) predicts that Nigeria's GDP will expand by 3.1% next year, compared to 2.9% in 2023. According to Daniel Leigh, division chief in the IMF's research department, these reforms are expected to result in "stronger and more inclusive growth."

South Africa

Nigeria

Egypt

Macroeconomy

Economic Growth

GDP

IMF

World Economic Outlook

Bola Tinubu