Nigeria has surpassed South Africa to become the largest economy in Africa following South Africa’s recession.
South Africa has slipped into a recession for the second consecutive year.
Statistics South Africa’s data reveals that the country’s Gross Domestic Product (GDP) contracted by 1.4% in the last quarter of 2019, with gross fixed capital formation decreasing by an annualized 10%.
Conversely, Nigeria’s economy is expanding while South Africa’s is contracting. Bloomberg reports that Nigeria’s economic growth surpassed expectations in the fourth quarter of 2019 due to increased oil output and measures taken by the Central Bank to stimulate credit growth.
Nigeria’s GDP experienced a 2.55% growth in the fourth quarter of 2019, marking its highest quarterly growth since the 2016 recession and solidifying its position as the largest economy in Africa.
According to Bloomberg, whether Nigeria or South Africa is the continent’s largest economy has long depended on the exchange rate used for Nigeria. However, both the official Naira rate of 306 per dollar and the weaker market exchange rate of around 360 now place Nigeria at the top.
Bloomberg’s report states, “Nigeria’s economic growth beat forecasts in the fourth quarter, helping its economy to expand the most in four years in 2019 as oil output increased and the central bank took steps to boost credit growth. The GDP in the West African country stood at $476bn or $402bn, depending on the rate used.”
“South Africa’s economy went the opposite direction. It slumped into a second recession in consecutive years, contracting more than projected in the fourth quarter as power cuts weighed on output and business confidence.”
“For the full year, expansion was 0.2 per cent, the least since the global financial crisis, and even less than the central bank and government estimated. Based on an average rand-dollar exchange rate of 14.43 for the year, the GDP was $352bn.”
Bloomberg’s projections indicate that Nigeria’s economy is expected to continue growing at a faster pace, with the International Monetary Fund forecasting a 2% growth for Nigeria in 2020, compared to South Africa’s anticipated growth of around 0.8% at best.