An Empirical Investigation into the Effect of Global Oil Price on Nigeria Gross Domestic Product from (2000-2019)

Abstract

Nigeria is one of the largest oil producing countries in the world, its revenue is largely dependent on crude oil sales. The country vulnerability to crude oil price fluctuations is a phenomenon that has been a reoccurring event Thus; this study aims to examine the impact of Global crude oil prices on Nigeria gross domestic product (GDP) and the economy at large. The study relied deeply on secondary data obtained from the Central bank of Nigeria (CBN). The data were subjected to simple regression analysis, Pearson Product Moment Correlation to determine the effect and relationship between oil price (Independent Variable) and Nigeria GDP (dependent variables). And time series analysis was also used to examine the trend in the data set and fit a more parsimonious model that would aid forecasting of future crude oil price and GDP. The study found that Global crude oil price have a significant correlation with Nigeria gross domestic product, %58.1 of variation in Nigeria gross domestic product is attributed to fluctuation in Global crude oil price and Nigeria GDP will increase by ₦4.21bn per unit increase in crude oil price. The study thus conclude that global crude oil price has a significant impact on Nigeria GDP and its economy at large. The study among others recommend diversification of the Nigerian economy is most imperative given the economic recession in the country now and the impending take-over of the transportation industry by electric vehicles.

Keywords: Oil price, Gross domestic product, Economy, Price shock, Exchange rate, Nigeria.

DOI: 10.7176/EJBM/13-4-03

Publication date: February 28^th 2021