In April 2016 the International Monetary Fund (IMF) made a statement detailing the challenges being faced by African countries, due in part to lower commodity prices and recent severe weather conditions. They advised the continent to review its policies in order to encourage growth and as a result fulfil their full potential over the coming years.
Nigeria has the second largest stock exchange on the continent and is classified as a mixed economy emerging market, this means that its economic system includes both socialist and capitalist characteristics. Whilst in general this type of market is considered less efficient than a fully free market, it continues to ensure that Nigeria remains the biggest economy in Africa.
Nigeria has however found 2015 and 2016 to be very difficult years, losing $490 billion in 2015 and $155 billion so far in 2016. The decline in the value of its currency by 30%, is in part to blame for the country’s economic slump.
In 2014 South Africa lost its title as the largest economy in Africa, following Nigeria’s decision to rebase its GDP data. Whilst it is still considered to have the most diverse and advanced economy in Africa, it has been one the countries across the world that has been most adversely affected by the slowing global economic growth and drop in commodity prices. Their currency suffered a depreciation of over 50% between the years of 2012 and 2015, and this has contributed to the on average, 7% annual decline in the country’s GDP since 2012. Unemployment also continues to be a significant problem for the country, with over 26% of the population currently unemployed.
Having regained their ranking as the 2nd largest economy in Africa from Egypt, having briefly lost it in May 2016, they are now making moves to replace Nigeria as the continents biggest economy, closing the gap in the two countries GDP figures to only $60 million, compared to $170 million in 2015.
Since President Mohamed Morsi was deposed in July 2013, there has been some political uncertainty in Egypt however its diverse economy, including agriculture, industry, services and tourism, has ensured that its GDP has continued to grow significantly over the last few years. The GDP in Egypt has been expanding by an average of 7.5% every year since 2012, in fact in May 2016 Egypt usurped South Africa, replacing it as the second largest economy in Africa. South Africa did however reclaim this position in July 2016 when its GDP grew to $275 billion versus the $270 billion produced in Egypt.
Read the World Economic Outlook 2016 here.
Image source: europe.chinadaily.com.cn