Achi news desk-
(Bloomberg) – Nigeria’s economy, which was ranked as the largest in Africa in 2022, is set to fall to fourth place this year and Egypt, which held the top position in 2023, is expected to drop to second place after South Africa after a series of currency devaluations, International Monetary Fund forecasts show.
The International Monetary Fund’s World Economic Outlook estimates Nigeria’s gross domestic product at $253 billion based on current prices this year, behind energy-rich Algeria at $267 billion, Egypt at $348 billion and South Africa at $373 billion. dollar.
Africa’s most industrialized country will remain the continent’s largest economy until Egypt reclaims the mantle in 2027, while Nigeria is expected to remain in fourth place for years to come, figures released this week showed.
The fortunes of Nigeria and Egypt have dimmed as they grapple with high inflation and plummeting currencies.
Bola Tinubu has announced major policy reforms since becoming Nigeria’s president in late May 2023, including allowing the currency to float more freely, eliminating costly energy and gasoline subsidies and taking steps to address the dollar shortage. Despite a recent recovery, the naira is still 50% weaker against the greenback than it was before he took office after two currency devaluations.
Read more: Why Nigeria’s currency has rebounded and what it means: QuickTake
Egypt, one of the world’s most indebted countries and the IMF’s second-biggest borrower after Argentina, also allowed its currency to float, sending the pound plunging nearly 40% against the dollar last month to attract investment.
The International Monetary Fund has called for a flexible currency regime for months, and the multilateral lender rewarded Egypt’s government by nearly tripling the size of a loan program first approved in 2022 to $8 billion. This was a catalyst for an additional flow of approximately $14 billion in financial support from the European Union and the World Bank.
Read more: Egypt avoided economic collapse. What’s next?: QuickTake
Unlike Nigeria’s naira and the Egyptian pound, the value of South Africa’s rand has long been determined in the financial markets and has lost about 4% of its value against the dollar this year. Its economy is expected to benefit from improvements in its energy supply and plans to deal with logistical bottlenecks.
Algeria, a member of OPEC+ has benefited from high oil and gas prices caused first by Russia’s invasion of Ukraine and now the tensions in the Middle East. It stepped in to ease some of Europe’s gas woes after Russia cut supplies amid its war in Ukraine.
©2024 Bloomberg LP
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