IMPACT OF SELECTED MACROECONOMIC VARIABLES ON ECONOMIC GROWTH IN NIGERIA

Abstract

This study examined impact of selected macroeconomic variables on economic growth in Nigeria from 1980 and 2022. Economic growth, represented by Real Gross Domestic Product (RGDPgr), is a key indicator of the nation's economic performance. The study employed econometric techniques which includes Descriptive Statistics, Augmented Dickey Fuller Tests for Unit Roots, the Autoregressive Distributed Lag (ARDL) Bound test and the Diagnostics Tests to determine the reliability of the models and results obtained. The independent variables considered in the study are Inflation rate (INFR), Exchange Rate (EXR), Interest rate (INR), Unemployment rate (UNER) and Gross fixed capital formation (GFCF). The findings revealed that inflation rate had negative and significant impact on the economic growth in Nigeria while interest rates, exchange rate had positive significant impact on the economic growth in Nigeria. The study recommended that the negative correlation identified between inflation rate and real GDP growth rate underscores the imperative of maintaining price stability via proffer fiscal and monetary policies to assist in tackling inflation. The unexpected positive relationship between interest rates and real GDP growth rate challenges conventional economic assumptions, prompting a reconsideration of the intricate dynamics at play within the Nigerian economic context, the study concludes that a stable exchange rate environment is crucial for fostering economic growth. As Nigeria charts its economic course, the study provides valuable insights for policymakers, guiding the formulation of strategies that promote stability and pave the way for robust and sustainable economic growth.