FORECASTING OF NIGERIA MANUFACTURING SECTOR GROWTH RATES USING ARIMA MODEL
Abstract
The objective of this study is to identify a forecasting model that can predict Nigeria's future manufacturing sector growthrateand to ascertain whether policy makers could maintain a steady and sustainable growth rate in the manufacturing sector.The study employed Autoregressive Integrated Moving Average (ARIMA) on annual data from 1970 to 2014 on manufacturing production index (MPI) as a measure of manufacturing sector growth rate. The ARIMA model selected is the Autoregressive (AR) [ARIMA (1, 0, 0)]. That is, the AR1) model was selected as the most appropriate for forecasting model for manufacturing sector growth rates in Nigeria. The ARIMA model was selected on the basis of Autocorrelation (AC) and Partial Autocorrelation (PAC) Function and the inverse root of AR/MA polynomials for stability of the estimated model The forecasted values of manufacturing sector growth for 2015, 2016, 2017, 2018, 2019 and 2020 using Dynamic Forecast were
72.1%, 75.6%, 75.9%, 76.4%, 76.8% and 77.2% respectively. The major finding of this study is that Nigeria's manufacturing sector future growth rate is moving gradually with an average annual projected growth of approximately 90.8 %. The projected rate showed that Nigeria government needs to double her efforts in order to fructify its vision of becoming twenty largest economies in the world by 2020 and the 12th largest economy by 2050.
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