The International Monetary Fund (IMF) has affirmed Nigeria’s economy as the biggest in Africa, ahead of South Africa and Egypt, despite the economic recession the country is battling with.
Nigeria was reported to have lost its spot as Africa’s biggest economy to South Africa in August 2016, following the recalculation of the country’s Gross Domestic Product (GDP).
However, the IMF’s World Economic Outlook for October 2016 puts South Africa’s GDP at $280.36 billion, from $314.73 billion in 2015.
Meanwhile, latest estimates from the IMF put Nigeria’s GDP at $415.08 billion, from $493.83 billion at the end of 2015.
Although Egypt’s 2016 data was reported as unavailable, its 2015 size remained at $330.15 billion, while that of Algeria, one of the largest economies on the continent, was put at $168.31 billion.
The United States, China and Japan maintain their spots as the largest economies in the world, ahead of Germany, United Kingdom and France.
According to a review in September, Nigeria’s current economic recession will outlast 2016, with a GDP contraction of 1.7 per cent.
The IMF had predicted that Nigeria’s economy would grow away from a recession in 2017. The country last witnessed a recession, for less than a year, in 1991, and experienced a prolonged one that started in 1982 and lasted until 1984.
The IMF also predicted that the Nigerian economy will grow by 0.6% in 2017, effectively lifting the country out of an officially declared recession. According to the Bretton Woods institution, Nigeria has a marginal lead over South Africa and Egypt in terms of GDP.
In the IMF report released on October 5, Nigeria’s real GDP is expected to increase marginally by 0.6%, with Consumer Prices rising by 17.1%. Also, Fitch ratings on the other hand projected a 2.6% growth in Nigeria’s GDP for 2017.
Beyond 2017, IMF expects global growth to gradually increase by 3.8% in 2021. This recovery in global activity, which is expected to be driven entirely by emerging market and developing economies, is premised on the normalization of growth rates in countries like Nigeria, Russia, South Africa, Latin America and parts of the Middle East.
Although the global rating agency had reduced its forecast for the country’s 2016 GDP growth to 1% from 1.5% due to weak performance in the first half of the year, Fitch believes the economy will bounce back in 2017, but with downside risks if dollar liquidity remains tight.
Furthermore, Fitch believes that dollar liquidity will not significantly improve until market participants become more comfortable with the sustainability of the exchange-rate level, which is likely to require further narrowing of the spread between the official and parallel market rates.
The rating agency also increased Nigeria’s average Consumer Price Index (CPI) forecast for 2016 to 14% from 11% and expects the government to secure financing from multilateral development banks and bilateral sources.