South Africa is yet again the biggest economy on the African continent, a position it reclaims from Nigeria, due to a surging rand, businesstech reports
Using the gross domestic product at the end of 2015 published by the International monetary fund (IMF), Bloomberg reported that the dimensions of South Africa’s economy is $301 billion at the rand’s current rate of exchange, whereas Nigeria’s gross domestic product (GDP) is $296 billion.
Bloomberg noted that the rand has gained over 16 pf against the US dollar since the beginning of 2016, whereas in contrast, Nigeria’s naira has lost over a 3rd of its worth.
In Afternoon trade on Wednesday, the rand firmed by over a % against the dollar, to R13.29.
The media agency noted that both Nigeria and South Africa face the risk of recession, having contracted in the first quarter of the year. Nigeria’s economy decreased by 0.4%, whereas South Africa’s GDP contracted by 0.2%.
Nigeria has suffered amid low oil costs, while South Africa is sensitive to shifts in the commodity cycle.
“More than the growth outlook, in the short term the rating of these economies is probably going to be determined by rate of exchange movements,” an economic expert, Alan Cameron, told Bloomberg.
He said that though Nigeria is unlikely to be dislodged as Africa’s largest economy in the long run, “the momentum that took it there in the 1st place is now long gone.”
Meanwhile, in July, South Africa stepped past Egypt because the continents’ second largest economy in dollar terms, having lacked behind the North African country earlier in the year.
Culled from: businesstech.co.za