South Africa, the hitherto biggest economy in Africa, has entered its second recession in two years. The situation has helped in giving Nigeria a lift in the economy of the continent.
In the fourth quarter of last year, South Africa’s Gross Domestic Product nose-dived by 1.4 percent following a revised 0.8 percent contraction in the third quarter. These facts are from Statistics South Africa.
Interestingly, Nigeria’s GDP shut up by 2.55 percent in the fourth quarter of 2019, obviously its highest quarterly growth since the recession of 2016.
When compared to a growth rate of 1.91 percent in 2018, Nigeria’s economic growth climbed up by 2.27 percent in 2019.
Bloomberg however, reported on Tuesday that the answer to the question of whether South Africa or Nigeria was the biggest economy on the continent had long depended on which exchange rate you use for the West African big brother.
There is an official naira rate of 306 per dollar and the weaker market exchange rate of some N360 that investors use which helps to put Nigeria tops.
“Nigeria’s economic growth beat forecasts in the fourth quarter, helping its economy to expand the most in four years in 2019 as oil output increased and the central bank took steps to boost credit growth. The GDP in the West African country stood at $476bn or $402bn, depending on the rate used.
“South Africa’s economy went the opposite direction. It slumped into a second recession in consecutive years, contracting more than projected in the fourth quarter as power cuts weighed on output and business confidence.
“For the full year, expansion was 0.2 percent, the least since the global financial crisis, and even less than the central bank and government estimated. Based on an average rand-dollar exchange rate of 14.43 for the year, the GDP was $352bn”, Bloomberg report says
According to it, projections show Nigeria’s economy will continue to grow faster.
Adding, it says while the International Monetary Fund cut its forecast for Nigeria’s 2020 growth to two percent from 2.5 percent last month due to lower oil prices, South Africa’s GDP was forecast to expand only by 0.8 percent.