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
Highlights
Crude oil is an important natural resource found under porous rock formations scattered around the world, once refined products such as the premium motor spirit, gasoline, diesel and other forms of petrochemical can be extracted from it, so its presence in any country constitute serious economic importance
In assessment of the impact of Global crude oil price on Nigeria GDP, the fitted regression model where Global crude oil price (Predictor variable) and GDP as the dependent variable was given as GDP = 48.8 + 4.21 Crude Oil price with coefficient of determination R-Sq = 58.1% this indicate that Global crude oil price account for 58.1% variation in Nigeria GDP and from the fitted model the constant coefficient is 48.8(α = 48.8) and the slope coefficient is 4.21(i.e. β = 4.21),this means that gross domestic product (GDP) increases on average by #4.210bn per unit increase in crude oil price. in testing of stated hypothesis, Since the significance values ( 0.00) < α (0.05), this is an indication that the slope coefficients is significant in the model
5.1 Conclusion This study empirically investigated the effect of Global crude oil prices on Nigerian Gross domestic product
Summary
Crude oil is an important natural resource found under porous rock formations scattered around the world, once refined products such as the premium motor spirit, gasoline, diesel and other forms of petrochemical can be extracted from it, so its presence in any country constitute serious economic importance. Nigeria is the leading oil producing country in Africa It holds the largest natural gas reserves on the continent and was the world’s fifth–largest exporter of liquefied natural gas in 2018. Nigeria is the leading crude oil producer in Africa, production is affected by sporadic supply disruptions. The overall performance could be measured as a flow of final products or as a flow of cost. This implies that Gross Domestic Product takes into consideration the market price of every good or service instead of adding up the quantities of the products and services directly
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