According to the International Monetary Fund’s forecasts, Nigeria’s economy, which held the position of Africa’s largest in 2022, is projected to fall to fourth place this year following a series of currency devaluations.
The IMF’s World Economic Outlook, as reported by Bloomberg, estimates Nigeria’s gross domestic product at $253 billion based on current prices this year, placing it behind Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion.
The report suggests that South Africa will remain the continent’s largest economy until Egypt overtakes it in 2027. Meanwhile, Nigeria is expected to remain in fourth place for years to come.
Nigeria’s economy has faced challenges since President Bola Tinubu implemented significant policy reforms, including the removal of fuel subsidies and the devaluation of the Naira. While there has been a recent rebound, the currency remains 50% weaker against the dollar than before Tinubu took office, due to two currency devaluations.
Egypt, one of the most indebted emerging economies and the IMF’s second-largest borrower after Argentina, has also allowed its currency to float, resulting in a nearly 40% decline in the pound’s value against the dollar last month to attract investment.
In contrast to the naira and the pound, the value of South Africa’s rand is determined by financial markets and has lost approximately 4% of its value against the dollar this year. South Africa’s economy is expected to improve due to enhancements in its energy supply and efforts to address logistic challenges.
