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Nigeria’s Economy Projected to Slip, IMF Reports

by Vicky Oselumese
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Nigeria's Economy Projected to Slip, IMF Reports

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According to the International Monetary Fund (IMF), Nigeria’s economy, which held the position as Africa’s largest in 2022, is projected to slip to fourth place this year. This decline is primarily attributed to a series of currency devaluations. The IMF’s World Economic Outlook, as reported by Bloomberg, estimates Nigeria’s gross domestic product (GDP) at $253 billion based on current prices for this year.

This places Nigeria behind Algeria, Egypt, and South Africa, with respective GDPs of $267 billion, $348 billion, and $373 billion. The report also predicts that South Africa will remain the continent’s largest economy until Egypt reclaims the top spot in 2027.

Meanwhile, Nigeria is expected to remain in fourth place for the foreseeable future, according to the data released this week. Nigeria has been grappling with economic challenges since President Bola Tinubu implemented significant policy reforms, including the end of the subsidy regime and the devaluation of the naira.

Although there has been a recent rebound, the Nigerian currency is still 50% weaker against the US dollar compared to before these reforms were enacted. In contrast, Egypt, one of the world’s most indebted countries and the IMF’s second-largest borrower after Argentina, has also allowed its currency to float.

This move resulted in a nearly 40% depreciation of the Egyptian pound against the US dollar last month, aimed at attracting investment. Unlike Nigeria and Egypt, the value of South Africa’s rand has long been determined by the financial markets.

Although the rand has experienced a 4% depreciation against the US dollar this year, the country’s economy is expected to benefit from improvements in its energy supply and plans to address logistical bottlenecks.

This article was updated 1 month ago

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