Nigeria's economic landscape witnessed a significant shift as it relinquished its position as Africa's largest economy, falling to fourth place behind South Africa, Egypt, and Algeria, according to the latest forecast by the International Monetary Fund (IMF).
The IMF's World Economic Outlook projects Nigeria's gross domestic product (GDP) at $253 billion, trailing Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion based on current prices for the year.
South Africa, Africa's most industrialized nation, is set to retain its status as the continent's largest economy until Egypt reclaims the top spot in 2027, according to the IMF's projections. Nigeria is anticipated to remain in fourth place for the foreseeable future.
The economic dynamics of both Nigeria and Egypt have been marred by challenges such as high inflation and currency depreciation. President Ahmed Tinubu's decision to float the naira last year, coupled with reforms aimed at addressing currency shortages and subsidy removals, has contributed to the economic landscape's volatility.
In the first quarter of 2024, the naira experienced further devaluation against the dollar, reflecting ongoing currency pressures. Conversely, the naira recorded a 50 per cent gain against the dollar in March, underscoring the currency's volatility.
Egypt, grappling with significant debt levels and currency devaluation, initiated currency floatation measures, resulting in a substantial decline in the pound's value against the dollar. This move aimed to attract foreign investment, prompting the IMF to expand its loan program to Egypt and attracting additional financial support from global institutions.
South Africa, with a long-established flexible currency regime, has seen modest depreciation of the rand against the dollar this year. Efforts to improve energy infrastructure and address logistical bottlenecks are expected to bolster South Africa's economic resilience.
Meanwhile, Algeria, an OPEC+ member, has benefited from soaring oil and gas prices amid geopolitical tensions. Its intervention to alleviate Europe's gas shortages amidst the Russia-Ukraine conflict has underscored its strategic importance in global energy markets.
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