Nigeria is set to overtake South Africa and reclaim its spot as the biggest economy in Africa at the end of the year, the International Monetary Fund has predicted.
In its latest report, the IMF projected that Nigeria’s Gross Domestic Product would hit $415.08bn at the end of this year, from $493.831bn, its value at the end of 2015.
It, however, predicted that South Africa’s GDP would hit $280.367bn for this year, down from $314.732bn it actually recorded a year ago.
Nigeria lost its position as the biggest economy on the continent to South Africa in August this year after the recalculation of the nation’s GDP.
In the report entitled: ‘World Economic Outlook October 2016: Subdued Demand, Symptoms and Remedies’, the IMF said, “The picture for sub-Saharan Africa is increasingly one of multispeed growth. While growth projections were revised down substantially in the region, they mostly reflect challenging macroeconomic conditions in its largest economies, which are adjusting to lower commodity revenues.”
Although Egypt’s 2016 data was not available, its last year’s size was $330.15bn. Algeria, one of the largest economies on the continent, was put at $168.31bn.
The IMF expects the Nigerian economy to grow by 0.6 per cent in 2017, while global growth is projected to slow to 3.1 per cent this year before recovering to 3.4 per cent in 2017.
It stated, “While growth in emerging Asia and especially India continues to be resilient, the largest economies in sub-Saharan Africa (Nigeria, South Africa and Angola) are experiencing sharp slowdowns or recessions as lower commodity prices interact with difficult domestic political and economic conditions. Brazil and Russia continue to face challenging macroeconomic conditions, but their outlook has strengthened somewhat relative to last April.
“Activity weakened in sub-Saharan Africa, led by Nigeria, where (oil) production was disrupted by shortages of foreign exchange, militant activity in the Niger Delta, and electricity blackouts. Momentum in South Africa was flat, despite the improvements in the external environment, notably stabilisation in China. Elsewhere, resilience in Côte d’Ivoire, Kenya, Senegal and Tanzania partially offset generally softer activity across the region.”
Reacting to the projections, an economist and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “The Nigerian economy has bigger prospect than that of the South Africa. South Africa cannot boast of what Nigeria has. Our population is 180 million of which 70 million belong to the productive age group. South Africa is less than 60 million people.
“All economic sectors have potential for growth. Therefore, with appropriate policy measures, it should be bigger and stronger than that of South Africa in the near future.”
However, an analyst at Afrinvest West Africa, Mr. Ayodeji Ebo, doubted if the IMF’s forecast would come to pass.
He argued that the Nigerian economy had yet to see any significant growth since the beginning of the year and in recent months.
“Are we going to record increase in economic activities, consumer spending, manufacturing and production activities and increased demand between now and end of the year? I doubt if this will happen between now and year end,” he said.