The economy of Nigeria, which held the top spot as Africa’s largest economy in 2022, is poised to slide to fourth place this year due to a series of currency devaluations, according to forecasts from the International Monetary Fund.
Based on current prices, the IMF’s World Economic Outlook, as cited by Bloomberg, projected Nigeria’s gross domestic product at $253 billion for this year, placing it behind economic powerhouses in North Africa such as Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion.
The report also suggests that South Africa will maintain its position as the continent’s largest economy until Egypt regains the top spot in 2027. Nigeria is forecasted to remain in fourth place for the foreseeable future, based on data released this week.
Nigeria has been facing economic hurdles since President Bola Tinubu introduced significant policy reforms, including the discontinuation of the subsidy program and the devaluation of the Naira. Despite a recent recovery, the currency remains 50% weaker against the US dollar compared to before the reforms were implemented, following two currency devaluations.
Meanwhile, Egypt, a country with one of the highest debt levels in the developing world and the IMF’s second-largest borrower after Argentina, has also allowed its currency to float, resulting in a nearly 40% drop in the value of the Egyptian pound against the dollar last month to attract investments.
Unlike the naira of Nigeria and the pound of Egypt, the value of South Africa’s rand has been determined by financial markets for a long time. The rand has experienced a 4% decline against the dollar this year. The South African economy is expected to benefit from enhancements to its energy supply and initiatives to address logistical challenges.