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South Africa’s economy regained the position of Africa’s largest in dollar terms more than two years after losing it to Nigeria as the value of the nations’ currencies moved in opposite directions.

 

In Afternoon trade on Wednesday, the rand firmed by more than a percent against the dollar, to R13.29.

Bloomberg reported that the size of South Africa’s economy has risen to $301 billion at the rand’s current exchange rate, while Nigeria’s is at $296 billion… the value was worked out using the gross domestic product (GDP) at the end of 2015 published by the International Monetary Fund,

Bloomberg noted that the Rand has gained more than 16% against the US currency since the start of 2016, while in contrast, Nigeria’s Naira has lost more than a third of its value.

The media agency pointed out that both Nigeria and South Africa are facing the risk of recession, having contracted in the first quarter of the year. Nigeria’s economy shrank by 0.4%, while South Africa’s GDP contracted by 0.2%.

Nigeria has suffered amid low oil prices, while South Africa is sensitive to shifts in the commodity cycle.

“More than the growth outlook, in the short term the ranking of these economies is likely to be determined by exchange rate movements,” Alan Cameron, an economist at Exotix Partners LLP, told Bloomberg.

He said that although Nigeria is unlikely to be unseated as Africa’s largest economy in the long run, “the momentum that took it there in the first place is now long gone.”

The ruling African National Congress’s (ANC) lowest support since 1994 in the August 3 local government vote led to further gains on speculation that it will pressure the party to introduce economic reforms that will boost growth and cut unemployment.

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Brent Lindeque is the founder and editor in charge at Good Things Guy.

Recognised as one of the Mail and Guardian’s Top 200 Young South African’s as well as a Primedia LeadSA Hero, Brent is a change maker, thought leader, radio host, foodie, vlogger, writer and all round good guy.

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