EXPLORING THE PREDICTIVE POWER OF UNEMPLOYMENT RATES ON INFLATION IN EMERGING ECONOMIES IN AFRICA: A QUANTITATIVE APPROACH.

Abstract

This study explores the predictive power of unemployment rates on inflation in emerging economies, with a focus on African regions. Using a quantitative approach, we analyzed data on unemployment and inflation rates across five distinct African regions: Eastern, Middle, Northern, Southern, and Western Africa. Descriptive statistics reveal notable regional disparities, with Southern Africa exhibiting the highest mean values for both unemployment (2.08) and inflation (1.90), while Western Africa showed lower inflation rates. The data analysis indicates that unemployment rates tend to have a negative skew and are somewhat platykurtic across regions, while inflation rates exhibit moderate negative skewness and leptokurtic distributions, suggesting more extreme values than expected. The ANOVA tests confirm significant differences in mean unemployment and inflation rates across the regions (p < 0.05). Further, regression analysis demonstrates a significant relationship between unemployment and inflation rates, with the log of unemployment rate positively predicting the log of inflation rate ( = 0.148, p = 0.000). However, the low R² value (0.016) suggests that while the relationship exists, it only explains a small portion of the variation in inflation rates. Overall, this study highlights regional variations in unemployment and inflation dynamics across Africa and provides empirical evidence of a positive though weak relationship between unemployment and inflation contributing valuable insights to economic policymaking in emerging economies.

Keywords: Unemployment rate, Inflation rate, Emerging economies, African regions, Quantitative analysis, Economic disparities.