AFRICA DAY - WHO REALLY HAS THE BIGGEST ECONOMY?
Much has recently been made of reports that Egypt has overtaken South Africa as Africa’s second largest economy and that we have now slipped to third place - with Nigeria in first place. All this 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. Commentators must now console South Africans with the reassurance that we are still the most “highly industrialised” economy in Africa.
The relative size of economies is generally measured by assessing their Gross Domestic Products on a PPP (Purchasing Power Parity) basis - which irons out kinks caused by the differences between official exchange rates and the actual purchasing power of the currencies involved.
In terms of PPP GDP China in 2015 already had the largest economy in the world - US$ 19,392 billion, (17% of global PPP GDP) compared with the EU at US$ 19,205 billion and the United States at US$ 17,947 billion. India was next with US$ 7,965 billion.
The largest economy in Africa was Nigeria at 22nd position in the world with a PPP GDP of US$ 1 092 billion. Egypt, at 23rd place, had a slightly smaller PPP GDP of US$ of 1 048 billion. South Africa limped in at third place in Africa and 30th place in the world with a PPP GDP of US$ 724 billion.
But it was not always thus. Nigeria suddenly assumed the leading position in 2014 after recalculating the basis on which its GDP was assessed, increasing it overnight by 89%.