Falling Naira: South Africa displaced Nigeria as Africa’s largest economy

Falling Naira: South Africa displaced Nigeria as Africa’s largest economy

Wednesday, August 10, 2016 5:10 pm

Adeosun: Minister of Finance

Adeosun: Minister of Finance

South Africa’s economy has displaced Nigeria as Africa’s largest economy in dollar terms following the devaluation of naira by over a a third of its value after the central bank bank floated the West African country’s a currency last June.

Bloomberg reported on Wednesday that based on gross domestic product at the end of 2015 published by the International Monetary Fund, the size of South Africa’s economy is $301 billion at the rand’s current exchange rate, while Nigeria’s GDP is $296 billion.

While naira has been losing value against the dollar since it was floated by Central Bank in June,  South African’s rand has gained more than 16 percent against the dollar since the start of 2016, the website also noted.

Bloomberg reported that the Nigerian economy shrank by 0.4 percent in the three months through March from a year earlier amid low oil prices and output and shortage of foreign currency.

The shortage of dollars curbed imports, including fuel while the GDP of South Africa also contracted by 0.2 percent from a year earlier as farming and mining output declined.

“More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements,” Alan Cameron, an economist at Exotix Partners LLP, Bloomberg quoted as saying in e-mailed responses to questions on Aug. 2. Although Nigeria is unlikely to be unseated as Africa’s largest economy in the long run, “the momentum that took it there in the first place is now long gone.”

Nigeria became Africa’s largest economy in April 2014 after Federal Government’s reassessment of  GDP data for the first time in two decades.

Nigerian economy was assessed at estimated at about 80 trillion naira after the exercise.

read more at http://www.bloomberg.com/news/articles/2016-08-10/south-africa-s-economy-regains-rank-as-africa-s-biggest-on-rand

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One Comment

  • yagazie says:

    So South Africa has regained the top spot as Africa’s largest economy in dollar terms. So what and does the average Nigerian really care?

    For most Nigerians, it’s the quality of life ( such as access to basic services, a good business/investment climate, first class infrastructure in the form of roads, railways, seaports, airports, stable power and water supply, good telecommunications network, a vibrant manufacturing/industrial sector, food sufficiency, a stable and mature financial/banking system, access to excellent medical and educational faciities, a robust and functional judicial system, good and non-partisan civil service, independent press and vocal civil societal organisations, vastly reduced opportunities for corruptioni and corrupt practices, a well funded security aparatus that is firmly within democratic civilian control/oversight etc), that really matters.

    We are not intrested in empty vain slogans as ‘Africa’s largest economy’ – when we have massive unemployment, security challenges, a comatose manufacturing sector, rampant corruption, decrepit infrastructure, poor educational and health services etc.

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