Abstract
Cameroon is among the African countries aspiring to become an emerging economy by the year 2035. Therefore, projecting into the future by policy makers in order to know the right course of action is imperative. The objective of this study is to identify a good forecasting model that can predict Cameroon’s future economic growth rate and to ascertain whether policy makers could maintain a steady and sustainable growth rate that will fructify its vision of becoming an emerging economy by 2035. The study employed ARIMA and ARIMA/GARCH models on quarterly data from 1994q1 to 2014q4 on economic growth rate extracted from World Bank Development Indicators. Among the different models used, the mixed ARIMA(0,1,3)/E-GARCH(1,2) model was selected on the basis of the root mean squared error (RMSE), mean absolute percentage error (MAPE), mean absolute error (MAE) and the Theil's inequality coefficient (U-STATISTICS) criteria. The major finding of this study is that Cameroon’s future growth rate is slow and not sustainable with an average annual projected growth of approximately 6.099 %, unlike China that maintained a steady growth rate till it transcended into an emerging economy. The projected rate compared to China’s growth rates, shows that Cameroon needs to double her efforts in order to fructify its vision of becoming an emerging economy by the year 2035. Key words: Emerging economy, economic growth rate, ARIMA/GARCH models.
Highlights
Most African countries want to become key decision makers in the world’s economic arena by swinging their economic pendulum towards an emerging economy
Kamil and Noor (2006) concluded that the mix Autoregressive Integrated Moving Average (ARIMA)/Generalised Autoregressive Conditional Heteroscedastic (GARCH) model outperformed the Autoregressive Conditional Heteroskedasticity (ARCH) model when used to forecast the price of raw palm oil in Malaysia (Figure 1)
The autocorrelation function (ACF) and partial autocorrelation function (PACF) obtained from the residual of the specified ARIMA model as well as the χ2 and Ljung-Box Q statistics are diagnostic checking tools
Summary
Cameroon is among the African countries aspiring to become an emerging economy by the year 2035. The objective of this study is to identify a good forecasting model that can predict Cameroon’s future economic growth rate and to ascertain whether policy makers could maintain a steady and sustainable growth rate that will fructify its vision of becoming an emerging economy by 2035. The major finding of this study is that Cameroon’s future growth rate is slow and not sustainable with an average annual projected growth of approximately 6.099 %, unlike China that maintained a steady growth rate till it transcended into an emerging economy. The projected rate compared to China’s growth rates, shows that Cameroon needs to double her efforts in order to fructify its vision of becoming an emerging economy by the year 2035
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