Johannesburg - As the continent celebrates Africa Day, which commemorates the founding of what has since become the African Union on May 25, 1963, the FW de Klerk Foundation probes which economy is really the continent’s biggest.
Recently, news emerged that South Africa no longer had the second-largest economy on the continent; instead, this accolade now goes to Egypt.
This was according to analysis by Christie Viljoen, an economist at auditing and advisory firm KPMG SA, on the International Monetary Funds’s latest figures.
Viljoen says the IMF World Economic Outlook (WEO), released in mid-April, shows that not only will the local economy grow at just 0.8 percent this year, but also that the country is now only the third-largest economy on the continent behind Nigeria and new silver medalist Egypt.
South Africa lost its status as the continent’s largest economy in 2014 when it finished an exercise to rebase its economic data. This boosted its gross domestic product 80 percent higher for 2013, to $510 billion. At the time, SA’s nominal economy was $356 billion.
Egypt’s overtaking of SA’s economy is largely due to the depreciation of the rand, while its own currency declined less against the dollar, Viljoen noted.
Dave Steward, executive director of the FW de Klerk Foundation, notes SA’s displacement as the second-largest economy on the continent has added to South Africa’s sense of national decline “after having prided ourselves for so long as being in an unassailable position as the continent’s largest economy”.
Steward says economies should be measured by assessing their gross domestic products on a purchasing power parity (PPP) basis. This, he says, irons out kinks caused by the differences between official exchange rates and the actual purchasing power of the currencies involved.
African economies: SA slips to bronze
In terms of PPP, China’s economy was already the largest last year, at $19 392 billion, or 17 of global PPP GDP compared with the EU at $19 205 billion and the United States at $17 947 billion, Steward says. India was next with $ 7 965 billion.
The largest economy in Africa was Nigeria at 22nd position in the world with a PPP GDP of $1 092 billion. Egypt, at 23rd place, had a slightly smaller PPP GDP of $1 048 billion. South Africa limped in at third place in Africa and 30th place in the world with a PPP GDP of $ 724 billion, says Steward.
“Commentators must now console South Africans with the reassurance that we are still the most “highly industrialised” economy in Africa.”
IOL