NAVIGATING ENERGY MARKET UNCERTAINTY: THE ECONOMIC CONSEQUENCES OF PRICE VOLATILITY IN AFRICA
MT Saidu, Umar Tijjani Babuga, Usman Adamu Bello and Ali lbrahim Dasuki
Volume 12 Issue 1
Abstract
This study empirically investigates the macroeconomic consequences of energy price volatility across 15 emerging African economies from 2000 to 2025, focusing on its effects on GDP growth, inflation, and trade balances. Employing a fixed effects panel estimator with Driscoll-Kraay standard errors to account for cross-sectional dependence and heteroskedasticity the analysis reveals that oil price increases exert a significant negative impact on economic growth, with a $10 per barrel rise associated with an approximate 0.8 percentage point reduction in annual GDP. Inflation rates rise markedly in response to energy price shocks, further dampening economic performance, while improvements in the trade balance partially mitigate these effects. Notably, natural gas consumption emerged as a positive contributor to growth, highlighting the importance of energy diversification. The findings underscore the acute vulnerability of oil-importing nations relative to exporters. Based on these results, the study concludes with targeted policy recommendations aimed at enhancing regional resilience, including strategic diversification of energy sources, structural regulatory reforms, and investment in energy efficiency infrastructure to foster sustainable development amid global market uncertainty. Keywords: Energy Price Volatility, African Economies, Macroeconomic Performance, Panel Data Econometrics, Policy Resilience
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