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The International Monetary Fund predicts that due to a decrease in oil production and the depreciation of the Naira, South Africa will surpass Nigeria and Egypt as the largest economy in Africa next year. According to the International Monetary Fund's World Economic Outlook, South Africa's gross domestic product will reach $401 billion by 2024, Nigeria's $395 billion, and Egypt's $358 billion.
This change is expected to be temporary, with South Africa only occupying the top spot for a year before being surpassed by Nigeria and falling to third place in 2026, lagging behind Egypt. Nigeria's economic performance is influenced by factors such as declining oil production, high inflation, and the depreciation of the Naira.
Nigeria's recent policy reforms, including changing its foreign exchange system and eliminating expensive gasoline subsidies, aim to address the country's financial challenges. Despite the short-term impact of these measures, the International Monetary Fund predicts that Nigeria's GDP will grow by 3.1% in 2024, compared to 2.9% in 2023.
However, economist Yvone Mhango believes that South Africa's brief rise as Africa's largest economy in 2024 is mainly due to the depreciation of GDP in US dollars in Nigeria and Egypt.
Due to a shortage of foreign exchange, Egypt has devalued its currency three times this year, resulting in a significant depreciation of its currency against the US dollar. The government received $3 billion in aid from the International Monetary Fund this year, which requires more flexible currency exchange rates.
The IMF assessment originally scheduled for March and September in Egypt has been postponed. A successful assessment may result in a $1.3 billion resilience fund, approximately $700 million in deferred loans, and significant Gulf investments.
The South African economy is expected to grow by 0.9% in 2023 and 1.8% in 2024. If logistics challenges, electricity issues, and other reforms are addressed, there may be a faster growth rate of 2.5% to 3%. Measures such as restoring oil production, addressing security issues, and improving the power sector are crucial for Nigeria to achieve expected GDP growth. The challenges of infrastructure and power outages have also limited the country's economic growth.