Few months after being relegated to the third biggest African economy, the SA economy has now regained its stand as the second biggest African economy.
According to latest report from IMF, the SA economy moved a step ahead of that of Egypt with a GDP of around $275 billion, versus the north African nation’s $270 billion.
The SA economy was doing well, taking the top position as the continent’s best economy until the early months of 2014 when Nigeria overthrew it after the country re-based its Gross Domestic Product Data.
The economy grew worse in 2015 when IMF provided more sobering GDP statistics for South Africa relegating it to the third best after the Egypt. Then it was only recognized as “most advanced economy,” holding on to the infrastructural and regulatory advantages it enjoys.
“Psychologically, I do think this is a blow. We’ve always thought of ourselves as the powerhouse of Africa, and then we’re number two and now we’re pushed to number three,” Lullu Krugel, KPMG’s chief economist reportedly said.
Nigeria-SA Economic Gap Narrows
South Africa has managed to attract sufficient foreign investment to meet the shortfall between domestic saving and the investment needed to fund growth.
Investments in South African equities accounted for most of these foreign flows, although fixed income has also grown materially in the period following the global financial crisis
During this time, low global growth, drought and government policy rates drove investors to search for greener pastures often in increasingly challenging markets.
Today, after much efforts by both the government and concerned individuals, the economy seems to be regaining its strength with the gap between the top largest economy, Nigeria and that of SA narrowing down to only $60 billion, compared to the $170 billion gap at the end of 2015.
The data shows that Africa’s top three economies have faced a rough 2016 so far, with the three leading markets down significantly from their position at the end of last year.
South Africa has lost in excess of $35 billion (from $313 billion at the end of 2015), while Egypt has lost around $60 billion (from $330 billion) and Nigeria has lost as much as $155 billion (from $490 billion).
However, it is believed that the rest of the months that will see the end of the year will see improvements in the SA economy even as the country still battles to bring down to the barest minimum, the high rate of unemployment in the country.