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Nigeria slips from being Africa’s largest economy to fourth

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Nigeria is now the fourth-largest economy in Africa, slipping from first position in 2022.

This is contained in a recent report made available by the International Monetary Fund, showing that the country has further moved backwards in rank as a result of the economic policies implemented by President Bola Tinubu.

According to Bloomberg, Egypt, which held the top position in 2023, is projected to fall to second behind South Africa after a series of currency devaluations, International Monetary Fund forecasts show.

Based on current prices, the IMF’s World Economic Outlook expects Nigeria’s GDP to be $253 billion this year, trailing energy-rich Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion.

According to figures released this week, Africa’s most industrialised nation will continue to be the continent’s largest economy until Egypt reclaims the title in 2027, while Nigeria is predicted to remain fourth for many years.

Nigeria and Egypt’s fortunes have deteriorated as countries battle with rising inflation and currency depreciation.

Tinubu promised significant policy reforms after becoming Nigeria’s president at the end of May 2023, including enabling the currency to float more freely, eliminating exorbitant energy and petrol subsidies, and addressing dollar shortages. Despite a recent resurgence, the naira remains 50% weaker than the dollar than it was when he took office, following two currency devaluations.

Egypt, one of the emerging world’s most indebted countries and the IMF’s second-largest borrower after Argentina, has also allowed its currency to float, resulting in an almost 40% drop in the pound’s value against the dollar last month in an effort to attract investment.

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The IMF had been pressing for a flexible currency policy for months, and the multilateral lender rewarded Egypt’s government by nearly tripling the size of a loan programme agreed upon in 2022 to $8 billion. This resulted in an additional $14 billion in financial assistance from the European Union and the World Bank.

Unlike Nigeria’s naira and Egypt’s pound, the value of the South African rand has traditionally been determined by financial markets, and it has lost around 4% of its value against the dollar this year. Its economy is expected to gain from increased energy supplies and efforts to address logistical constraints.

Algeria, an OPEC+ member, has benefited from high oil and gas prices induced by Russia’s invasion of Ukraine and current Middle East tensions. It stepped in to alleviate some of Europe’s gas shortages after Russia cut supplies during its war in Ukraine.


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