Using a structural vector auto regression svar model, the paper explores the relationships between the monetary policy rate interest rate, growth rate of money supply, inflation, exchange rate growth and growth rate of output. Modeling and forecasting naira usd exchange rate in. Theme 9 uncertainty around population and population growth rate theme 10 the exchange rate depreciates in the latter part of the year. Timeseries data for the period 1990 2011 were used to examine the impact of inflation on economic growth. Pdf exchange rate and the economic growth in nigeria. Exchange rate vs usd 5 years of economic forecasts for more than 30 economic indicators.
Theoretical framework the concept of exchange rate. Exchange rate fluctuation on nigeria economic growth mensch mind. Equatorial journal of finance and management sciences, volume 1, issue 1, 2016. Following this, the study recommended among others that monetary authority should ensure exchange rate stability in order to stem inflationary tendencies in nigeria which have adverse effect on the growth. But to aid the completion of the study, the researcher intends to achieve the following specific objectives. An empirical evaluation of the impact of exchange rate on. The recession was driven by a large contraction in the oil sector. Effects of exchange rate movements on economic growth in nigeria pdf logo. Nigeria as a whole, through an empirical evaluation. Impact of oil price shock and exchange rate volatility on economic growth in nigeria.
The exchange rate is the price of one currency in terms of another currency, that is, the current market price for which one national currency can be exchanged for another. A multivariate regression approach was employed to estimate augmented growth models. Focuseconomics consensus forecast panelists expect the naira to trade at 291 per usd at the end of 2016. Impact of exchange rate on agriculture and manufacturing sector in nigeria leave a comment economics project materials by emmanuel joseph noko the research aim is to determine the impact of exchange rate on agriculture and manufacturing sector in nigeria. The impact of exchange rate fluctuation on the nigerian. It is the required amount of units of a currency that can buy another amount of units of another currency. In addition to the global price of crude oil falling to a year low in january 2016 figure 1. Nigeria gdp annual growth rate 19822019 data 20202022. Effects of exchange rate movements on economic growth in nigeria eme o. The index measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and poor. Impact of exchange rate fluctuation on nige rias economic growth 19812015, full project materials. Jan 22, 2020 on monday, the international monetary fund imf released its global economic outlook where the fund announced it expects global growth to slow in 2020 to 2. Download free impact of exchange rate on the nigeria economic growth in nigeria for academic research, education, universities 08060592024, 07052196405 what customers say login register download.
35 exchange rate movements, import and economic growth in nigeria 19862010. Research reports have shown that foreign direct investment impacts on the growth and economic development of especially the developing countries like nigeria. Exchange rate instability is menacing economic growth in nigeria. The impact of monetary policy on the economic growth of. Since the adoption of exchange rate deregulation policy in nigeria, the exchange rate, which is the price of domestic currency in terms of foreign currency, has become so volatile. Based on quarterly series for the period 1986 to 2010, the paper examines the possible direct and indirect relationship between exchange rates and gdp growth. Impact of exchange rate on the nigeria economic growth. Undervaluation and economic growth in selected developing countries, 19502004 china 0 4 2 6 8 0. Effects of exchange rate movements on economic growth in nigeria. Fdi and economic growth ayanwale 2007 and asiedu 2001 reported that the relationship between fdi and economic growth may be country and period specific. From his findings, exchange rate of naira to dollar has negative correlation with the gdp. The effect of exchange rate and inflation on foreign direct investment and its relationship with economic growth in nigeria article pdf available march 2011 with. This is because expost facto research design is one in which the researcher does not have the ability to manipulate the variables. Motivated by this controversial, this study examined the impact of inflation on economic growth and established the existence of inflation growth relationship.
Following the oil price collapse in 20142016, combined with negative production shocks, the gross domestic product gdp growth rate dropped to 2. Impact of exchange rate fluctuation on selected economic sectors. It is 1 foreign exchange rate1 1 contributors to this series are. Impact of oil price shock and exchange rate volatility on. The legal backing for monetary policy by the bank derives from the various statutes of the bank such as the cbn act of 1958 as amended in cbn decree no. Effect of exchange rate fluctuations on manufacturing sector. Nigeria economic growth after only gradually recovering from the 2016 recession, the economy is set to contract again this year. Consequently, non conflicting sectoral policies are conceived within the ambit of the overall policy framework such that each sectoral policy reinforces each other. The first ease of the nigerian exchange rate policy began in 1959 with the establishment of the central bank of nigeria cbn. For 2017, the panel foresees the ngn trading at 306 per usd. Aside this also is the snail speed situation of the development of. Impact of exchange rate on the nigeria economic growth free.
The study employed the ordinary least square ols multiple regression technique for the analysis. Determinants of economic growth in nigeria kazeem b. The pegged exchange rate system was the first exchange rate regime adopted in nigeria. This paper seeks to assess the impact of oil price shock and real exchange rate volatility on real economic growth in nigeria on the basis of quarterly data from 1986q1 to 2007q4. It, therefore, becomes necessary to highlight the monetary policy in nigeria. Effect of exchange rates on manufacturing sector growth in.
Secondary data were obtained from the central bank of nigeria and national bureau of statistics. Macroeconomic performance indicators and exchange rate. Aggregate growth rates calculated using gdp weights at 2010 prices and market exchange rates. This study was aimed at determining the relationship among gross domestic product, exchange rate, imports, exports and inflation rate in nigeria.
Though inflation rate is not new in the nigerian economic history, the recent rates of inflation have been a cause of great concern to many. The analysis of exchange rate fluctuation on nigerias. Korkmaz 20 analysed the effect of exchange rate on economic growth gdp for 9 randomly selected european countries france, germany, greece, hungary, italy, spain, turkey, poland and united. It analyzed the data for nigeria using ordinary least square ols method and. Nigeria gdp economic growth quickens to over fouryear high in q4 2019. Ajide1 this paper investigates the role of frazer economic freedom index on fdi growth relationship over the period spanning 1980 through 2010 using annual time series data. Research method there are a large number of macroeconomic variables which affect macro economic performance beside exchange rate. Oil price volatility continues to influence nigeria s growth performance. Such problems include high unemployment rate, low investment, high rate of inflation and unstable foreign exchange rate.
The fixed and floating exchange eras were compared to know the exchange rate system in which the economy has fairly better. The aim of this study is to investigate the impact of exchange rate fluctuation on economic growthin nigeria within the context of four profound theories. The effect of the global economic meltdown on nigerian exchange rate was phenomenon as the naira exchange rate to the dollar rose astronomically from about. Comparative analysis of monetary and exchange rate policy. Exchange rate fluctuation and the nigeria economic growth. Timeseries data for the period 1990 2011 were used to examine the impact of inflation on economic gro. The study concluded that there was no significant impact of exchange rate on agdp, mgdp. This economic update provides an overview of recent developments in the nigerian economy. These perceived problems are being claimed to have caused a fast decline in the economic growth of nigeria. Pdf the effect of exchange rates on economic growth. The empirical analysis starts by analyzing the time series properties of the data which is followed by examining the nature of causality among the variables. Trading economics members can view, download and compare data from nearly 200 countries, including more than 20 million economic indicators, exchange rates, government bond yields, stock indexes and.
This study investigated the effect of exchange rate fluctuations on nigerian economy. Effect of exchange rate fluctuations on manufacturing. Ayodele 2014, analyzed the impact of exchange rate on the economic performance of nigeria using the ordinary least squares ols method. Nigeria economy gdp, inflation, cpi and interest rate. Exchange rate volatility and economic growth in nigeria 1986. Exchange rate volatility, stock market performance and. Effect of foreign exchange rate fluctuations on nigerian economy. Aug 03, 2017 economic growth in nigeria is expected to recover slightly to 0. Low oil revenues and the lack of major tax policy reforms to significantly increase nonoil revenues led to large revenue shortfalls at all levels of governmentin. The cbn was specifically set up to manage the countrys currency with the objective of attaining a sound and stable national currency. Between 2000 and 2014, nigeria s gross domestic product gdp grew at an average rate of 7% per year.
But the discourse issue lies in the type of impact negative or positive. Pdf the impact of exchange rate regimes on economic growth. This study focused on the nexus between exchange rates and economic growth in nigeria over the period of 1978 to 2014. Effects of exchange rate fluctuations on economic growth. The impact of exchange rate on nigeria nonoil exports. Motivated by this controversial, this study examined the impact of inflation on economic gro wth and established the existence of inflation growth relationship. All in all, the findings suggest that fi xed exchange rates constrai n the performance of.
Pwc estimates that nigeria would need an investment rate of at least 26% of gdp to achieve a growth of 7%. Exchange rate fluctuation on nigeria economic gro wth is an important economy metric as it reflects underlying strength and competitiveness with world economies asinya and takon, 2014. There is a relationship that exists between the nigerias exchange rate policies on her level of economic growth since 19902008. Nigeria continues its recovery from the 2016 recession, sustaining an estimated 2 percent growthrate in 2019. And also investigate the relationship between the exchange rate and economic growth of nigeria and thereafter proffer some solutions to the problem of unstable and unpredictable nature of nigerian exchange rate and foreign exchange earnings. Nigeria gdp growth rate 20102019 data 20202022 forecast. Chigbu federal university of technology owerri, nigeria and federal polytechnic nekede, owerri abstract the objective of this study is to examine the impact of capital market on economic growth in nigeria.
The gdp is used a s dependent variable indicating economic growth of nigeria. The purpose of this paper is to analyse empirically the effects of exchange rate on economic growth in the fyrom. The study covered the period of years from year 2000 to year 2012. Effects of exchange rate movements on economic growth in.
Exchange rate volatility, stock market performance and foreign direct investment in nigeria odili okwuchukwu department of banking and finance, college of management sciences, michael okpara, university of agriculture. The evolution of the nigerian foreign exchange market was influenced by such factors as the. Specific content for the schematic asset price model of the exchange rate is provided in sec. Recent researches have been done on the testing of international fisher effect, interest rate, gdp growth rate and purchasing power parity, but few researches based on regression. Unlocking the productive potential of nigeria s people and resource endowments english abstract. Exchange rate and the economic growth in nigeria ideasrepec. Aug 17, 2016 1 to investigate the effects of foreign exchange rate and policies on the economic growth of nigeria 2 to see how exchange rate in nigeria interact with a macroeconomic variable to bring about economic growth. This page provides nigeria gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic. In this article we test the relationship between per capita income differential and exchange rate differential between two different economic background countries. We apply the ols approach to estimate the regression equation and present the model that analyzes the impacts of exchange rate on economic growth. Atan2 this study investigates the effect of exchange rate movements on real output growth in nigeria. The effect of exchange rate and inflation on foreign direct investment and its relationship with economic growth in nigeria article pdf available march 2011 with 8,869 reads how we measure.
Exchange rate fluctuation on nigeria economic growth is an important economy metric as it reflects underlying strength and competitiveness with world economies asinya and takon, 2014. Therefore, secondary time series data for a period of 32 years from 1981 to 2012 was. Pdf this study focused on the nexus between exchange rates and economic growth in nigeria over the period of 1978 to 2014. Nigerian naira data, forecasts, historical chart was last updated on february of 2020. This study employed an econometric approach to assess the relationship between effective real exchange rate and selected macroeconomic variables in nigeria from 1981to 2014. The imf, therefore, advised the federal government to pursue a policy. Significance of study the significance of this study lies on the recommendations made at the end of the study and its implantation. Scenarios 2019 elections three emerging scenarios nigeria s risk matrix. Pdf the effect of exchange rate and inflation on foreign. Based on quarterly series for the period 1986 to 2010, the paper examines the possible direct and indirect.
To examine the effect of inflation rate on the economic growth of nigeria. The main objective of the study is to ascertain the effect of exchange rate and inflation on nigerias economic growth. Pdf exchange rate policy and nigerias economic growth. A country foreign exchange policy is derived from the perceives overall economic objectives to achieve and the expected direction of growth cbn, 2003. Impact of exchange rate on agriculture and manufacturing. The economy shifted into a higher gear in the final quarter of last year, with annual gdp growth accelerating from 2. Implications for economic growth in nigeria september 6, 2016. The statistic shows the growth in real gdp in nigeria from 2014 to 2018, with projections up until 2024.
The gross domestic product gdp in nigeria was worth 410 billion us dollars in 2019, according to official data from the world bank and projections from trading economics. Comparative analysis of monetary and exchange rate policy on. It has been established that countries with high political and economic risks will draws investment funds away prospective investors from other countries, thus, such countries are at greater risks of loss of. Pdf the impact of exchange rate regimes on economic. Impact of exchange rate fluctuation on nigerias economic growth 19812015, full project materials. Aug 03, 2017 the international monetary fund imf, yesterday, said nigeria is expected to emerge from recession this year with an economic growth of 0. Exchange rate fluctuation on nigeria economic growth.
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