South Africa’s economy reclaimed top spot in Africa, beating Nigeria for the first time in 2 years due to the contrasting fortunes of both countries’ currencies.
South Africa’s economy is $301 billion at the rand’s current exchange rate, while Nigeria’s GDP is $296 billion. This was according to the Gross Domestic Product (GDP) published by the International Monetary Fund at the end of 2015.
This development comes after the rand gained more than 16 percent against the dollar since the start of 2016, and Nigeria’s naira lost more than a third of its value after the central bank removed a currency peg in June.
Nigeria’s economy suffered a depreciation of 0.4 percent in the three months through March from a year earlier amid low oil prices and output and shortage of foreign currency. This affected a lot of things most notably importation as the importation of fuel reduced.
As for South Africa, their GDP contracted by 0.2 percent from a year earlier as farming and mining output declined.
This means both nations are facing the prospect of a recession due to the shrinking of their economies.
According to Bloomberg, Alan Cameron, an economist at Exotix Partners LLP, said in e-mailed responses to questions on Aug. 2, “More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements.”
It is believed that Nigeria in the grand scheme of things is still Africa’s largest economy and is unlikely to be usurped but “the momentum that took it there in the first place is now long gone.”