10-06-2026 13:19:11 (GMT +02:00) Pretoria / Cape Town, South Africa

Is SA really Africa's biggest economy?
16. Aug. 2016 Fin24

Cape Town - It is too close to make a call on whether South Africa
toppled Nigeria to claim the fancy status of the largest economy in
Africa, according to KPMG senior economist Christie Viljoen.


Viljoen told Fin24 it will "come down to the GDP numbers released by
the relevant statistics agencies over the next few weeks".


It was widely reported that SA had overtaken Nigeria as Africa`s
biggest economy in dollar terms owing to the strengthening of the rand
rally and the devaluation of the naira in June 2016.


Calculating the GDP numbers using last year's IMF figures and this
year's currency exchange numbers, shows that South Africa's economy is
worth around $301bn and Nigeria's $296bn, according to the
International Monetary Fund`s (IMF) World Economic Outlook
(WEO).


However, KPMG is casting doubt on these calculations saying that it is
methodologically incorrect.


"The reported US dollar estimates are based on GDP data from the end
of 2015, while the exchange rate readings are from August 2016. The
time difference between the two data points makes these calculations
spurious at best and not really a reliable indicator of recent
developments."


It noted that in order to reflect the impact of the naira devaluation
and the rand`s recovery on comparable GDP estimates, a calculation
would need to be made based on GDP data for the second quarter of
2016.


Viljoen said the 2016Q2 GDP reports from South Africa and



 

Nigeria will
reflect stagnant economies. "From an exchange rate perspective, the
naira ended the period notably weaker while the rand was quite
stronger."


He explained to Fin24 that each country`s statistics agency or central
bank is tasked with calculating local GDP numbers. The IMF then
collects this data and uses it in its own database and
forecasts.


To determine the biggest economy in Africa, Viljoen said each
country`s GDP is calculated in local currency terms.


"This is then divided by the relevant exchange rate to attain a US
dollar estimate of each country`s GDP, which is then comparable across
countries for a given year."


South Africa, Nigeria and Egypt will over the coming month release
their 2016Q2 GDP reports and then we will have more clarity on
this.


South After lost the title as Africa's largest economy in 2014 after
Nigeria rebased its GDP. The country then moved down to third place at
the end of 2015 largely due to its weakened currency as Egypt ranked
in second position.


These rankings however do not mean much for the average person.


"For the man in the street it does not really influence their general
wellbeing, income prospects, safety or wealth," said Viljoen. "For the
country as a whole, it is a positive influence in terms of foreign
investment and international standing." V.1704

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