Nigeria will lose its place as Africa’s third-largest economy in 2024 to Algeria after a decade of slow growth, inflationary pressures and naira depreciation, an IMF projection shared. Faster GDP growth in South Africa, Egypt, and Algeria will see Nigeria stay fourth for the next five years.
According to the IMF, persistent macroeconomic challenges on the continent have slowed growth, yet the outlook is stable. The Washington-based institution projects South Africa ($373 billion), Egypt ($348 billion), Algeria ($267 billion), and Nigeria ($253 billion) as Africa’s top four economies until 2030.
According to IMF World Economic Outlook, South Africa, Africa’s most industrialised country, will become Africa’s biggest economy with a GDP of $373 billion–a position the IMF expects it to retain until 2027.
This is despite South Africa’s struggles with blackouts, crime, corruption, and depreciating currency. Its 0.6% GDP growth was mainly driven by growth in the manufacturing, finance, real estate & business services sectors.
Since 2023, inflation has accelerated in Nigeria and Egypt and both nations have endured currency devaluations. Yet, there is some hope on the horizon.
In May 2023, Nigeria began economic reforms, including floating the naira and removing $10 billion-a-year fuel subsidies. The raft of changes was also aimed to address dollar shortages in Africa’s most populous nation.
While the naira has rebounded in the past month, fundamental macroeconomic issues persist. For instance, the country’s headline inflation defied analysts’ estimates after accelerating to 33.2% in March.
Unlike Nigeria, Egypt has sought IMF support to speed up its economic reforms as the Bretton-wood institution’s influence on Africa’s economic policies grows–Kenya, Ghana and Zambia are currently receiving support to help unlock funding amid debt distress.
As part of the economic reforms, it has also allowed its currency to float amid a renewed push to attract new investments. The Egyptian pound plunged about 40% against the dollar last month. The IMF expects the north African country to overtake South Africa as the biggest economy on the continent in 2027.
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