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South Africa to be the biggest economy in Africa

Due to a drop in oil production and the depreciation of the naira, the International Monetary Fund (IMF) projects that South Africa will overtake Nigeria and Egypt as the largest economy in Africa by the end of the year.

The IMF’s World Economic Outlook projects that in 2024, South Africa’s GDP will total $401 billion, Nigeria’s $395 billion, and Egypt’s $358 billion.

This shift is anticipated to be transient, with South Africa falling to third place behind Egypt in 2026 after holding the top slot for just a year before Nigeria passed it. The depreciation of the naira, rising inflation, and declining oil production have all had an impact on Nigeria’s economic performance.

Nigeria has recently enacted legislative measures to address the nation’s financial difficulties, including adjustments to the foreign exchange system and the elimination of pricey gasoline subsidies. Notwithstanding the short-term effects of these actions, the IMF projects that Nigeria’s GDP would expand by 3.1% in 2024 as opposed to 2.9% in 2023.

But according to Bloomberg analyst Yvone Mhango, the main cause of South Africa’s fleeting rise to the continent’s top economy in 2024 will be the depreciation of GDP in US dollars of Nigeria and Egypt.

Due to a lack of foreign exchange, Egypt has depreciated its currency three times this year, severely weakening it relative to the US dollar.

This year, the administration secured a $3 billion IMF package that stipulates a more accommodating exchange rate.

The IMF evaluations of Egypt, which were supposed to take place in March and September, have been rescheduled. A $1.3 billion resilience fund, almost $700 million in postponed loan tranches, and substantial Gulf investments might result from successful evaluations.

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