IMPACT OF CRUDE OIL PRICE FLUCTUATIONS ON ECONOMIC GROWTH IN NIGERIA

Abstract

This study examined the impact of crude oil price fluctuations on economic growth in Nigeria using annual secondary data from the Central Bank of Nigeria statistical bulletins covering the period 1981 to 2018. The error correction mechanism of the ordinary least squares was utilized to model for oil price volatility in line with the long run price determination theory. The generalized autoregressive conditional heteroscedasticity (GARCH) was also utilized as the main technique of analysis. The study revealed that 9.1000237 of oil price and -7.436407 of OPEC supply have significant impact on economic growth in Nigeria whereas 5.248408 of oil demand, 4.385210 of non OPEC supply and 0.009432 of exchange rate are statistically insignificant. The study further revealed that 9.100237 of oil price, 5.248408 of oil demand, 4.385210 of non OPEC supply and 0.009432 of exchange rate have a positive relationship with economic growth in Nigeria whereas 7.436407 of OPEC supply has a negative relationship with economic growth in Nigeria. The study recommends the building of federal government owned mechanized farm settlements in all the states of the federation in order to promote agricultural production thereby reducing the overdependence on oil.