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South Africa projected to briefly top Africa's economies in 2024

EditorMalvika Gurung
Published 2023/10/17, 08:38

In a surprising turn of events, South Africa is expected to momentarily surpass Nigeria and Egypt as Africa's largest economy in 2024, according to forecasts from the International Monetary Fund (IMF). This projection comes despite a challenging economic climate marked by a depreciating rand and concerns about the National Treasury missing its budget deficit and debt-to-GDP targets for the fiscal year ending March.

The IMF predicts that South Africa's GDP will reach $401 billion in 2024. However, this ascension is attributed more to the shrinking of Nigeria and Egypt's GDP due to sharp currency devaluations rather than robust growth within South Africa, as stated by Yvonne Mhango, an Africa economist. The IMF projects South Africa’s economy to grow 0.9% this year and 1.8% in 2024.

The country's free-floating rand has depreciated by about 10% this year due to concerns that the National Treasury will miss its budget deficit and debt-to-GDP targets. This is largely due to increased state support demands, revenue shortfalls, a deteriorating transport network, and record power cuts.

Meanwhile, Nigeria, currently dealing with declining oil production, inflation, and a depreciating naira, is expected to reclaim its position as Africa's largest economy by 2026. Since May, Nigeria's President Bola Tinubu has initiated significant financial policy changes including a revamp of the foreign-exchange system. Despite initial discomfort, these measures are projected to deliver long-term benefits.

Egypt finds itself in a similar situation. After securing a $3 billion IMF package last year, it has postponed implementing a flexible exchange rate until after December elections. This delay has stalled IMF reviews that could unlock funds and spur Gulf investments. The government is also in talks with the IMF about a potential $5 billion rescue package.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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