Nigeria has become the biggest economy in Africa after displacing South Africa after it entered its second recession in two years.
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. GDP in the West African country stood at $476 billion or $402 billion, depending on the rate used.
South Africa’s economy went in 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%, 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, GDP was $352 billion.
South Africa’s weak growth adds to pressure on the central bank to lower the benchmark interest rate at its Monetary Policy Committee meeting March 19, especially after the U.S. Federal Reserve’s emergency rate cut Tuesday amid risks from the spread of the coronavirus.
Projections show Nigeria’s economy will continue to grow faster than South Africa’s. While the International Monetary Fund cut its forecast for Nigeria’s 2020 growth to 2% from 2.5% last month, due to lower oil prices, South Africa’s GDP is forecast to expand only 0.8%.
-Bloomberg
