Driving Economic Growth Through Macroeconomic Indicators: Evidence From Nigeria

Abstract

This study empirically examined macroeconomic indicators driving economic growth in Nigeria. The specific objectives of the study were, to examine the relationship between inflation, unemployment rate, exchange rate, interest rate, poverty rate, consumption, investment, government expenditure, and balance of payment and economic growth in Nigeria. The data used for the study is secondary annual time series data covering a period of 1980 to 2024 and were collected from the Central Bank of Nigeria (CBN) annual statistical bulletin and National Bureau of Statistics (NBS). The study employed Autoregressive Distributed Lag (ARDL) model. The result revealed that inflation has a positive (99,919.158) insignificant (0.6970) relationship with economic growth in Nigeria, while interest rate has a positive (199,893.2) significant (0.0113) influence on economic growth in the long run in Nigeria. The result further showed that exchange rate has a negative (-34,967.28) insignificant (0.0906) impact on economic growth in Nigeria. The study also showed that unemployment rate is positively (686,032.6) significantly (0.0357) impact economic growth in the long run. The study further revealed that poverty rate has a positive (95,468.23) statistically significant (0.0404) long run impact on economic growth in Nigeria. More so the study found that consumption negatively (-909.545) insignificant (0.1577) impact economic growth in the long run. While Investment revealed a positive (81.12635) and insignificant (0.4658) impact on economic growth in the long run. The result on government expenditure revealed a negative (-869.8982) and insignificant (0.2589) impact on economic growth in Nigeria in the long run. Lastly, balance of payment has a positive (2.807797) statistically significant (0.0144) impact on economic growth in the long run. The study concludes that macroeconomic indicators have mixed impact on economic growth in Nigeria. The study therefore recommends that Nigeria economic growth needs targeted policies to address these macroeconomic indicators.