Abuja City in Nigeria |
As if a recession wasn’t enough bad news for
South Africa, it’s now confirmed as the continent’s second-largest economy.
The answer
to the question of whether South Africa or Nigeria, the two countries that
account for almost half of sub-Saharan Africa’s gross domestic product, is the
biggest economy on the continent has long depended on which exchange rate you
use for the West African nation.
But now
both the official naira rate of 306 per dollar and the weaker market exchange
rate of around 360 that almost all investors use put Nigeria on top.
Nigeria’s economic growth beat forecasts in the fourth quarter, helping
its economy to expand the most in four years in 2019 as oil output increased
and the central bank took steps to boost credit growth.
GDP in the West African country stood at $476 billion (official) or $402 billion (market rate), depending on the rate used.
South Africa’s economy went in the opposite direction.
It slumped
into a second recession in consecutive years, contracting more than projected
in the fourth quarter as power cuts weighed on output and business confidence.
For the
full year, expansion was 0.2%, the least since the global financial crisis, and
even less than the central bank and government estimated.
Based on an
average rand-dollar exchange rate of 14.43 for the year, GDP was $352 billion.
South
Africa’s weak growth adds to pressure on the central bank to lower the
benchmark interest rate at its Monetary Policy Committee meeting March 19,
especially after the U.S. Federal Reserve’s emergency rate cut Tuesday amid
risks from the spread of the coronavirus.
Projections
show Nigeria’s economy will continue to grow faster than South Africa’s.
While the
International Monetary Fund cut its forecast for Nigeria’s 2020 growth to 2%
from 2.5% last month, due to lower oil prices, South Africa’s GDP is forecast
to expand only 0.8%.
Other
countries following Nigeria and South Africa are Egypt with GDP of $302.3
billion, Algeria ($172.8 billion), Morocco ($ 119 billion), Kenya ($98.6
billion), Angola ($91.5 billion) and Ethiopia ($91.2 billion). -
Bloomberg
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