Nigeria Economy To Slip to 4th Place Following Currency Devaluation - IMF

The International Monetary Fund recently released statistics showing that Nigeria's economy, the largest in Africa in 2022, is projected to drop to fourth place this year due to a series of currency devaluations.

According to Bloomberg's reporting on the IMF's World Economic Outlook, Nigeria's GDP for this year is expected to be $253 billion based on current prices, which is less than the GDPs of North African superpowers Algeria ($267 billion), Egypt ($348 billion), and South Africa ($373 billion).

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The report says Egypt will retain its position as the largest economy in 2027, while South Africa will remain the largest on the continent. However, this week's data shows that Nigeria is expected to hold its fourth-place position for years.

Since President Bola Tinubu announced major policy changes, such as terminating the subsidy regime and devaluing the Naira, Nigeria has been facing economic challenges. Even with the recent recovery, the currency is still 50% less valuable than the US dollar, having declined twice before the administration took office.

Egypt, one of the emerging world's most indebted countries and the IMF's second-biggest borrower after Argentina, has also allowed its currency to float. Last month, to attract investment, the pound plunged almost 40% against the dollar, a report show.

The value of the South African rand, which has lost roughly 4% of its value against the dollar this year, is determined by financial markets, unlike the value of the Nigerian naira and the Egyptian pound. Its economy is expected to benefit from improvements to its energy supply and plans to tackle logistic bottlenecks.

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On Wednesday this week, it was reported that the International Monetary Fund (IMF) projected that global economic growth will continue upward, leading to declining inflation rates in 2024 and 2025.

This projection from the body comes after a record of better performance, which the IMF terms "surprisingly resilient." 

The IMF also stated that Nigeria's economic growth will surge from 0.2% to 3.5% in 2024. However, it revealed that growth for 2025 will see a cutback of -0.4% to 2.5%.

It was also reported that the IMF, in its most recent World Economic Outlook projection, now projects a 3.2% global expansion for 2024, which is in line with the growth rate observed in 2023 and marginally higher than the 3.1% projected in January.