Impact of Fallen Oil Prices on the Nigeria Economy

Abstract

Nigeria has substantially lost income from oil and has to fund the 2016 budget mainly from borrowed funds and perhaps from recovered loot. Thus, this study examined the impact of fallen oil prices on the Nigeria economy. The study relied deeply on secondary data. Materials and information were obtained from the CBN Annual Report and statement of Account, CBN Financial review, National Bureau of Statistics, Budget IT and Books and Annual Reports of Nigerian National Petroleum Corporation. The methods used in analyzing the data are simple regression analysis, Pearson Product Moment Correlation and Chi-Square to determine the effect and relationship between oil price (Independent Variable) and economic growth indicators such as Foreign exchange earnings, aggregate expenditure, budget servicing and public sector employment rate (dependent variables). The study found that fallen oil price has a significant effect on the Nigerian economy and has impacted negatively on it. The study among others recommend that diversification of Nigerian economy is most imperative given the economic recession in the country now.

Keywords: Oil, Economy and Nigeria