Asymmetry Impact of Economic Policy Uncertainty on Economic Growth in Nigeria

Economic policy uncertainty posed a significant challenge to economic stability by discouraging investment, weakening market confidence, and slowing growth. This study examined the impact of economic policy uncertainty on Nigeria’s economic growth from April 2016 to June 2023 using the Nonlinear Autoregressive Distributed Lag (NARDL) model and the Nishiyama Granger causality test. The findings revealed that the negative effects of economic policy uncertainty on growth were stronger and statistically significant compared to its positive effects. In the long run, trade openness and labor force expansion contributed positively to economic growth, while inflation had a harmful impact. These results highlighted the need for policymakers to implement transparent and stable economic policies to reduce uncertainty and encourage investment. Structural reforms were necessary to strengthen macroeconomic stability, improve institutional frameworks, and ensure regulatory consistency. Additionally, policies that promoted trade openness helped drive economic expansion, while labor market reforms enhanced productivity. Effective inflation control through sound fiscal and monetary policies was also crucial for maintaining sustainable economic growth in Nigeria.