THE IMPACT OF OIL PRICES ON THE NIGERIAN ECONOMIC GROWTH

Abstract

The Nigerian economy has faced numerous oil shocks since discovered the petroleum industry in 1970. The economy of Nigeria has continuously experienced a negative growth after the Iran Nuclear Agreement on June 14, 2015. The aim of this study is to examine the impact of oil shocks on the economic growth of Nigeria by utilizing time series data from 1970-2015. This study used an econometric analysis to test the impact of oil prices on GDP, stock market and exchange rate using Granger-Causality test. The result from these tests confirms that in the presence of oil shocks there is decline in economic growth. Therefore, GDP, stock market and exchange rate are all affected by oil shocks. This study concludes that high oil prices are never sustainable therefore the volatility of oil prices has a negative impact on the economic growth of Nigeria and also recommends that Nigeria should move beyond its complete oil dependency and exploit its already available resources within the country’s non-oil sector.