The International Monetary Fund (IMF) predicts that South Africa may overtake Nigeria as Africa’s largest economy, according to its World Economic Outlook.
South Africa, the most industrialised country on the continent, aims to achieve a gross domestic product (GDP) of $401 billion by 2024.
However, at current prices, Nigeria and Egypt presently have GDPs of $395 billion and $358 billion, respectively.
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The IMF noted that South Africa was expected to temporarily top the chart in 2024 before trailing Nigeria once again.
By 2026, it could potentially fall to third place, behind Egypt.
This forecast coincides with significant policy changes initiated by Nigerian President Bola Tinubu’s administration, aiming to revitalise the economy.
The measures include removing fuel subsidies and reforming the foreign exchange system to address dollar shortages and enhance tax revenue.
Daniel Leigh, division chief in the IMF’s research department, emphasised that these reforms should lead to “stronger and more inclusive growth.”
According to Bloomberg, Nigeria and Egypt had also adopted vital economic policies that could propel them back to the top in the near future.
“We believe the IMF’s projections reflect where it believes meaningful reforms will take place,” Bloomberg stated.
South Africa’s potential emergence as Africa’s largest economy in 2024 is largely attributed to the shrinking of Nigeria and Egypt’s GDP in dollar terms following sharp currency devaluations.
However, the long-term trajectory showed Nigeria and Egypt regaining their top spots, with Nigeria taking a strong lead.
“For Nigeria to realise the GDP expansion projected by the IMF, we think oil output must be restored to its potential; insecurity needs to be tackled; and the bottlenecks in the power sector addressed,” Bloomberg added.
