Could South Africa Lose Its Position As One Of The top 3 Economies In Africa.
The IMF’s latest update on the economic outlook of Africa shows that, while South Africa has lost its economic crown to Nigeria – and now second place to Egypt – the country should be a safe third on the continent for some time to come. However, if South Africa were to lose one more spot in the continental GDP ranking, it would lose third to Algeria.
The latest economic update from the International Monetary Fund shows that South Africa has become the third biggest economy on the African continent, after Egypt had snatched silver in terms of GDP output.
The IMF’s projections show that Egypt had a total GDP of $330.8 billion (R 5, 19 trillion) in 2015, versus South Africa’s $313 billion (R 4, 91 trillion) – a measure which will only extend in 2016 when a massive slowdown in economic growth hits the continent’s southern-most country.
The key factor in South Africa’s drop to third is the weak rand, which worked against the country in the conversion to dollars in the IMF report.
South Africa recorded a decline in the US dollar value of its economy during 2012 to ‘15 because of slowing real growth (in local currency terms) as well as a depreciation in the value of the rand.
The South African currency weakened from an average of R8.20/$ during 2012 to an average of R12.74/$ in 2015 – that is a depreciation of more than 50%. As a result, the nominal US dollar value of South Africa’s GDP declined by an average of almost 7% p.a. over the past four years.
For 2016, South Africa’s growth prospects were cut in half to only 0.6%, the IMF said, with a projected GDP output of only $266 billion (R4,178 trillion), in nominal terms. This, versus Egypt’s GDP expected to grow to $341 billion (R5, 35 trillion, widening the gap.
Looking at the economic projections for the rest of Africa, however, South Africa’s third position looks to be safe, as the next largest economy is Algeria – and with GDP output of $172 billion (R2, 7 trillion) in 2015 and a projected $166 billion (R 2, 6 trillion) in 2016, South Africa has a ‘comfortable’ $100 billion (R1, 57 trillion) lead.