(Bloomberg) — South Africa is set to briefly overtake Nigeria and Egypt as the continent’s largest economy next year, International Monetary Fund forecasts show.
The IMF’s World Economic Outlook envisions South Africa’s gross domestic product reaching $401 billion based on current prices in 2024, compared with Nigeria’s $395 billion and Egypt’s $358 billion. Africa’s most industrialized nation is expected to only hold the top spot for a year before it once again lags Nigeria, and then fall to third place behind Egypt in 2026, according to the report, which was released last week.
While IMF data shows Nigeria’s economy has eclipsed South Africa’s since 2018, its fortunes have dimmed along with a decline in production of oil and it has been grappling with runaway inflation and a plunge in the value of the naira.
Bola Tinubu has announced significant policy changes aimed at getting the state’s finances back on track since he became president of the West African nation at the end of May, including revamping the foreign-exchange system, scrapping costly gasoline subsidies and taking steps to address dollar shortages and boost tax revenue.
Those measures are causing initial pain in Africa’s most populous nation, but are expected to increasingly pay dividends going forward. The IMF sees GDP expanding 3.1% next year, compared with 2.9% in 2023.
The reforms should lead to “stronger and more inclusive growth,” Daniel Leigh, division chief in the IMF’s research department, told reporters at the fund’s annual meetings in Marrakech, Morocco, last week.
What Bloomberg Economics Says…
““We believe the IMF’s projections reflects where it believes meaningful reforms will take place. South Africa’s transient emergence as Africa’s largest economy in 2024 is mainly due to the shrinking of Nigeria and Egypt’s GDP in dollar terms, following sharp currency devaluations. However, the long-term trajectory shows Nigeria and Egypt regaining their top spots, with the former taking a strong lead. For Nigeria to realise the GDP expansion projected by the IMF, we think oil output must be restored to its potential; insecurity needs tackled; and the bottlenecks in the power sector addressed.”
— Yvonne Mhango, Africa economist
Egypt has devalued its currency three times since early 2022 as it confronts a foreign-exchange crunch, with the pound losing almost half its value against the dollar.
The government secured a $3 billion IMF package last year that requires a more flexible exchange rate, a move it’s only likely to undertake after December elections in which President Abdel-Fattah El-Sisi is seeking to extend his rule until 2030.
The delay has stalled IMF reviews that were initially scheduled for March and September. Successful appraisals could unlock about $700 million in postponed loan tranches, give Egypt access to a $1.3 billion resilience fund and potentially spur major Gulf investments.
The government is meanwhile in talks with the IMF on boosting its rescue package to more than $5 billion, according to people familiar with the discussions, confident it can overcome the hurdles preventing it from accessing support, including addressing concerns over its currency policy. The implementation of a reform agenda could underpin an economic growth rate of 5% or more from 2026, according to the IMF.
Read More: Egypt Seeks to Boost IMF Loan Over $5 Billion Amid Currency Woes
Unlike Nigeria’s naira and Egypt’s pound, South Africa’s rand is free floating, and has lost about 10% of its value against the dollar this year.
Currency weakness has been stoked by concerns that the National Treasury will miss its budget deficit and debt-to-GDP targets for the fiscal year through March due to increased demands on the state for support and revenue shortfalls, as a fraying transport network and record power cuts curtail economic growth.
The IMF sees South Africa’s economy expanding 0.9% this year and 1.8% in 2024, with the potential to expand 2.5% to 3% faster should it improve the power situation, tackle logistic bottlenecks and institute other reforms.
Read More: South Africa Set for Growth Take-off With Reforms, IMF Says
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
