South Africa steals Nigeria’s crown as continent’s largest economy

11 Aug 16

After holding the position for more than two years, Nigeria has lost the title of Africa’s largest economy in dollar terms to South Africa, Bloomberg reported yesterday.

Over the course of this year the value of Nigeria’s currency has fallen, while South Africa’s rising currency value has lifted it back to the top spot.

The news will come as another blow to the once-booming Nigeria, where the oil price slump, attacks on pipelines, and shortages of foreign currency have left the economy in dire straits.

However, both South Africa and Nigeria are at risk of falling into recession this year after their economies contracted in the first quarter. The Nigerian economy shrank by 0.4%, while South Africa’s contracted by 0.2%. However, the rand’s exchange rate gains have boosted South Africa’s GDP.

Based on International Monetary Fund figures from the end of 2015, the size of South Africa’s economy at the current exchange rate is $301bn, while Nigeria’s stands at $296bn.

Also, while the naira has lost more than a third of its value after the central bank removed a currency peg in June, the rand has gained over 16% against the dollar.

There was further bad news for oil-dependent Nigeria yesterday, in the form of a report by OPEC, the association of the world’s largest oil exporters. It announced that Nigeria’s production fell more sharply than any OPEC member in July.

Nigeria’s oil infrastructure has been plagued by attacks from militants, drastically limiting production at a key time for the country.

Nigerian president Mohammadu Buhari signed the nation’s largest-ever budget into law in May, tripling capital expenditure in a bid to jumpstart the economy.

The budget was based on production of around 2.2 million barrels per day. In June this year, production hit a two-year low, at just under 1.4 million per day.

The IMF has forecast that Nigeria’s economy will contract by 1.8% this year.

Nigeria pushed South Africa off its standing as Africa’s biggest economy in dollar terms in 2014, after a re-evaluation of the way it measures GDP saw its economy expand by more than three quarters.

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