Again, the rivalry between Nigeria and South Africa has show its face in the later overtaken the former economically as the Nigeria's currency take further dive due to dollar shortages and surge in demand for the greenback from importers and summer holiday makers.
Nigeria economy, which overtook its South Africa counterpart in 2014, has again reverted back to the second fiddle due to the weakening naira currency and appreciation of the Rand.
Nigeria, now second biggest economy in the continent re-opened its foreign exchange market in June to ease demand pressure on its forex reserves, but led to sharp depreciation in the value of the currency.
Consequently, according to the the Gross Domestic Product (GDP) at the end of 2015 published by the International Monetary Fund, the size of South Africa’s economy was $301 billion at the rand’s prevailing exchange rate, compared with Nigeria’s GDP at $296 billion.
The South African currency, the rand has gained about 16 per cent against the greenback since the start of 2016, while the Nigerian currency has lost more than a third of its value after the central bank introduced flexible exchange rate in June.
However, analysts said both Nigeria and South Africa face the risk of recession, having contracted in the first quarter of the year.
Nigeria’s economy shrank by 0.4 per cent, while South Africa’s GDP contracted by 0.2 per cent first quarter of this year.
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,” an economist at Exotix Partners LLP, Alan Cameron said.
The South African currency, the rand has gained about 16 per cent against the greenback since the start of 2016, while the Nigerian currency has lost more than a third of its value after the central bank introduced flexible exchange rate in June.
However, analysts said both Nigeria and South Africa face the risk of recession, having contracted in the first quarter of the year.
Nigeria’s economy shrank by 0.4 per cent, while South Africa’s GDP contracted by 0.2 per cent first quarter of this year.
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,” an economist at Exotix Partners LLP, Alan Cameron said.
0 comments:
Post a Comment