Egypt has surpassed South Africa as the second largest economy in Africa, the International Monetary Fund (IMF) said in its latest World Economic Outlook.
Africa’s most industrialized economy is struggling with falling commodity prices, the worst drought in more than a century and rising wage demands.
The IMF said South Africa has been taken over by Egypt owing to the depreciation of its currency, the rand.
The IMF also projected that the South African economy would grow by a mere 0.6 per cent this year, lower than the 0.9 per cent predicted by the South African government.
The global lender said BRICS member South Africa is now the third-largest economy on the African continent after Nigeria and Egypt.
Statistics South Africa said in a report released on Monday that unemployment rate in the first quarter rose to the highest in at least eight years.
The jobless rate increased to 26.7 per cent in the first quarter from 24.5 per cent in the previous three months.
Nigerian GDP in US dollar terms surpassed its South African equivalent in 2011. By the end of 2015, Nigeria’s GDP was measured at $490 billion compared to South Africa’s estimate of $313 billion.
South Africa recorded a decline in its economy during 2012-15 period due to slowdown of real growth (in local currency terms) as well as a depreciation in the value of the rand.
The South African currency weakened from an average of R8.20/US dollar in 2012 to an average of R12.74/US dollar last year — that is a depreciation of more than 50 per cent.
As a result, the nominal US dollar value of South Africa’s gross domestic product declined by an average of almost 7 per cent annually over the past four years.
South Africa needs annual expansion of 7.2 per cent from 2018 to achieve the government’s goal of reducing the jobless rate to 6 per cent by 2030, the World Bank said in February.