The International Monetary Fund (IMF) has forecasted that South Africa may surpass Nigeria as Africa’s largest economy.
According to the IMF World Economic Outlook, South Africa is expected to achieve a GDP of $401 billion in 2024, while Nigeria and Egypt have GDPs of $395 billion and $358 billion, respectively, based on current prices.
However, South Africa’s lead may be temporary, as it is projected to fall back to second place behind Nigeria.
In 2026, it could even drop to third place behind Egypt.
This change in rankings could be influenced by various factors, including policy changes and economic reforms in both Nigeria and South Africa.
Nigeria, under the administration of President Bola Tinubu, has made significant policy changes, including the removal of fuel subsidies and adjustments to the foreign exchange system.
These reforms may lead to short-term challenges but are expected to contribute to stronger and more inclusive economic growth.
Nigeria and Egypt have also undertaken vital economic policies aimed at regaining their top positions in the near future, according to Bloomberg.
Economic developments in Africa’s largest economies can impact the continent’s overall economic landscape.
“We believe the IMF’s projections reflect where it believes meaningful reforms will take place.
“South Africa’s transient emergence as Africa’s largest economy in 2024 is mainly due to the shrinking of Nigeria and Egypt’s GDP in dollar terms, following sharp currency devaluations.
“However, the long-term trajectory shows Nigeria and Egypt regaining their top spots, with the former taking a strong lead.
“For Nigeria to realise the GDP expansion projected by the IMF, we think oil output must be restored to its potential; insecurity needs tackled; and the bottlenecks in the power sector addressed,” Bloomberg said.
