Impact of inflation, interest rate and exchange rate on economic growth in ecowas countries

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The main objective of the study will be to examine the effect of exchange rate, interest rate and inflation on the economic growth amongst ECOWAS. The population of the study include the Economic Community of West African States which has 15 member country. The study sample is based on seven (7) countries due to data availability. The exchange rate of some countries using the West African CFA franc, which is a fixed exchange rate to the US dollar is excluded. The study made use of secondary data. The secondary data consist of the annual report of the country's central bank and the World Bank website. The study used available data from the year 2006 to 2021 and focused mainly on the long-run impact of these factors on economic growth. The study revealed unstable trends in the exchange rate, interest rate and inflation amongst ECOWAS Countries sampled. It was also found that exchange rate, interest rate and inflation have an influence on the growth of the economics of these countries. The while exchange rate had a negative impact, interest rate and inflation had a positive influence on the economic growth measured by the gross domestic production ratio. Therefore, the study concludes that the determinants of economic growth among West African countries include inflation, interest and exchange rates. This shows that inflation, interest and exchange rate can be used as a benchmark for investors to invest in a country. So it can be indicated that jointly, the independent variables namely inflation, exchange rates, and interest rates have either positive or negative and significant effects on the dependent variable (economic growth). It is recommended that government makes policy decisions to help stabilize the rate in exchange, interest and inflation for economic growth.
A thesis submitted to the department of accounting and finance, in partial fulfilment of the requirements for the award of the degree of master of science, finance