IMF forecasts Nigeria’s economy drop to fourth largest in Africa

Nigeria’s economy, which ranked as Africa’s largest in 2022, is set to slip to fourth place this year after a series of currency devaluations, International Monetary Fund forecasts show.

The IMF’s World Economic Outlook presented at the ongoing World Bank/IMF meetings in Washington estimated Nigeria’s gross domestic product at $253 billion based on current prices, behind North African powerhouses Algeria at $267 billion, Egypt at $348 billion, and South Africa at $373 billion.

The report added that South Africa will remain the continent’s largest economy with Egypt expected to reclaim the mantle in 2027. Nigeria however is expected to remain in fourth place for years to come, the data released this week shows.

Nigeria has been battling economic challenges for many years but President Bola Tinubu policy reforms including the end of the subsidy regime and the devaluation of the Naira resulted in a massive devaluation of the local currency. Despite a recent rebound, the currency is still 50% weaker against the greenback than it was before taking office after two currency devaluations.

Egypt, one of the emerging world’s most-indebted countries and the IMF’s second-biggest borrower after Argentina, has also allowed its currency to float, triggering an almost 40% plunge in the pound’s value against the dollar last month to attract investment.

Unlike Nigeria’s naira and Egypt’s pound, the value of South Africa’s rand has long been set in the financial markets and it has lost only 4% of its value against the dollar this year. Its economy is expected to benefit from improvements to its energy supply and plans to tackle logistic bottlenecks.