According to data released by the International Monetary Fund (IMF), South Africa has won back the title of ‘Africa’s largest economy’, two years after losing it to Nigeria.
The ranking was made on the basis of the size of the gross domestic product (GDP) of the countries. A re-calculation using current exchange rates has revealed South Africa as Africa’s largest economy because the rand has strengthened against the dollar.
While the South African rand has gained more than 16% since the beginning of 2016, Nigeria’s naira has plunged by more than a third of its value.
At their respective exchange rates, Nigeria’s GDP is US$296bn, while the size of South Africa’s GDP is US$301bn, Bloomberg reported. While there is not a huge gap in the figures, calculating the numbers using IMF figures from 2015 and this year’s currency exchange numbers, puts South Africa back on top.
However, analysts advise that both economies could be on the brink of recession, having contracted in the first quarter. Nigeria’s economy shrank by 0.4 per cent, while South Africa’s GDP contracted by 0.2 per cent.
Nigeria, which is heavily dependent on its oil exports, has been affected by the drop in oil prices. South Africa’s economy, on the other hand, is more diverse and is sensitive to shifts in commodity cycle, Bloomberg added.