South Africa’s economy has displaced Nigeria as Africa’s largest economy in dollar terms following the devaluation of naira by over a third of its value after the central bank bank floated the West African country’s a currency last June.
Bloomberg reported on Wednesday that based on gross domestic product at the end of 2015 published by the International Monetary Fund, the size of South Africa’s economy is $301 billion at the rand’s current exchange rate, while Nigeria’s GDP is $296 billion.
While naira has been losing value against the dollar since it was floated by Central Bank in June, South African’s rand has gained more than 16 percent against the dollar since the start of 2016, the website also noted.
Bloomberg reported that the Nigerian economy shrank by 0.4 percent in the three months through March from a year earlier amid low oil prices and output and shortage of foreign currency.
The shortage of dollars curbed imports, including fuel while the GDP of South Africa also contracted by 0.2 percent from a year earlier as farming and mining output declined.
“More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements,” Alan Cameron, an economist at Exotix Partners LLP, Bloomberg quoted as saying in e-mailed responses to questions on Aug. 2. Although Nigeria is unlikely to be unseated as Africa’s largest economy in the long run, “the momentum that took it there in the first place is now long gone.”
Nigeria became Africa’s largest economy in April 2014 after Federal Government’s reassessment of GDP data for the first time in two decades.
Nigerian economy was assessed at estimated at about 80 trillion naira after the exercise.