IMF Upholds Nigeria As Africa’s Largest Economy

The IMF in a World Economic Outlook for October 2016, estimated Nigeria’s Gross Domestic Product (GDP) at $415.080 billion, from $493.831 billion at the end of 2015, with that of South Africa at $280.367 billion, from $314.732 billion a year earlier and Egypt remained at $330.159 as at 2015.

Algeria, one of the largest economies on the continent, was put at $168.31 billion.

“The picture for sub-Saharan Africa is increasingly one of multispeed growth. While growth projections were revised down substantially in the region, they mostly reflect challenging macroeconomic conditions in its largest economies, which are adjusting to lower commodity revenues, the report said.

Due to lower oil receipts, lower power generation, and weak investor confidence, the IMF expects the Nigerian economy to grow by 0.6% in 2017, while global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.

Beyond 2017, the IMF expects global growth to be driven entirely by emerging market and developing economies.

According to the report, “while growth in emerging Asia and especially India continues to be resilient, the largest economies in sub-Saharan Africa (Nigeria, South Africa, Angola) are experiencing sharp slowdowns or recessions as lower commodity prices interact with difficult domestic political and economic conditions. Brazil and Russia continue to face challenging macroeconomic conditions, but their outlook has strengthened somewhat relative to last April.

“Activity weakened in sub-Saharan Africa, led by Nigeria, where production was disrupted by shortages of foreign exchange, militant activity in the Niger Delta, and electricity blackouts. Momentum in South Africa was flat, despite the improvements in the external environment—notably stabilisationin China. Elsewhere, resilience in Côte d’Ivoire,Kenya, Senegal, and Tanzania partially offset generally softer activity across the region.

“But exchange rate depreciations have also raised inflation for some (for example, Mozambique, Nigeria, and Zambia) or increased external debt liabilities. Fiscal deficits are likely to remain elevated through 2016 as weaker revenues offset cutbacks in spending.

“Among diversified economies, fiscal and external current account positions have not improved despite continued strong economic growth, reflecting limited progress in adopting counter cyclical policies—particularly with current spending outpacing revenue in some cases.

It will be recalled that in August 2016, Nigeria reportedly lost its spot as Africa’s biggest economy to South Africa, following the recalculation of the country’s gross domestic product (GDP).

Nigeria’s economy is currently in recession, the country was last in a recession, for less than a year, in 1991. The government has so far disbursed more than 700 billion naira in capital expenditure this year, part of a record 6.06 trillion naira ($30 billion) budget for 2016.