Sensitivity of the Economic Performance of Sub-Saharan African (SSA) Countries to Selected Macroeconomic Variables: A Fully Modified Panel Least Squares Approach

Abstract

his work was set out to show the impact of selected macroeconomic indicators on the growth performance of SSA countries. The choice of SSA as the jurisdiction for this study was informed by the growth conundrum, which these countries have experienced over the years regardless of the abundance of natural endowments in these countries. The study covered the period 1990 to 2022 using Gross Domestic Product Growth Rate (GDPGR) as the measurement of economic performance and the explanatory variables are exchange rate, interest rate, inflation rate, trade outwardness, government expenditure and financial development. Using the Panel Fully Modified Least Squares, it was found that government expenditure, trade outwardness and financial development positively and significantly contributed to the growth of the SSA economies. Conversely, inflation, exchange rate and unemployment adversely affected the economic performance of the SSA economies. The study can be adjudged to have added to the conversation on growth drivers for the SSA countries while advancing evidence-based recommendations for the imperatives of all-inclusive growth in the region. It is believed that the study would open the door for further discussions and inquiry into the growth drivers in SSA and the necessity of a healthy macroeconomic environment for the region. Policy makers, economic players and other regional blocs continue to expect the region to break away from perennial low growth level and join the league of economies on the trajectory of sustainable growth and development. The role of stable and well-managed macroeconomic environment in actualizing this dream can never be underplayed.