APPLYING EXPONENTIAL SMOOTHING MODELS TO FORECAST MACROECONOMIC VARIABLES IN NIGERIA

This study explores the application of exponential smoothing models to forecast key macroeconomic variables in Nigeria. It applies the Holt’s Linear Trend Model to forecast Nigeria's Gross Domestic Product (GDP) using quarterly data from the National Bureau of Statistics (NBS) for the period 2015 to 2023. The model, with Alpha (level smoothing parameter) of 0.8 and Beta (trend smoothing parameter) of 0.3, projects GDP to increase from 108.5 in Q1 2024 to 125.2 in Q4 2025, demonstrating a steady growth trend. The model’s forecasts were validated with a Mean Absolute Error (MAE) of 1.2 and a Mean Squared Error (MSE) of 1.8, indicating high accuracy and reliability. The findings suggest a positive economic outlook for Nigeria, supporting informed policy-making and strategic planning. Recommendations include regularly updating the model, incorporating additional macroeconomic variables, monitoring economic shocks, exploring advanced forecasting techniques, and utilizing forecast results to guide economic policies and business strategies.