The influence of oil price and exchange rate on GDP in Nigeria

Abstract

This paper seeks to assess the influence of crude oil price and exchange rate on GDP in Nigeria on the basis of monthly data from 2016M1 to 2024M5.  The empirical analysis starts by analyzing the time series properties of the data, which is followed by examining the nature of the variables.  Furthermore, the Johansen VAR-based co-integration technique is applied to observe the sensitivity of GDP to changes in crude oil prices and the exchange rate in the long-run.  Results from the ADF test show evidence of a unit root in the data revealed that all variables are stationary in first differences.  Findings show that crude oil price has positive impact on real GDP in Nigeria.  While, and exchange rate has an inverse relationship with real GDP.  The paper recommends greater diversification of the economy through investment in key productive sectors of the economy to guard against crude oil price and foreign exchange rate volatility.