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<p>Somalia faces significant challenges in achieving sustainable economic growth due to political instability, weak infrastructure, and ongoing conflicts. This study examines the asymmetric effects of trade openness and inflation on economic growth in Somalia, employing a nonlinear autoregressive distributed lag (NARDL) model to analyze annual data from 1980 to 2022. This research emphasizes Somalia’s vulnerability to external shocks and its dependence on international trade, which significantly influences its economic performance. The findings reveal that positive shocks to trade openness have a stronger positive impact on economic growth than negative shocks, while inflationary pressures, particularly negative inflation shocks, have a more detrimental effect on the economy. This study further investigates the role of key variables, such as foreign direct investment (FDI) and exchange rates, highlighting their significance in shaping Somalia’s economic stability. Based on these results, this study recommends policies that promote trade liberalization, control inflation, and invest in infrastructure to enhance Somalia’s resilience against external shocks. Strengthening institutions and improving the central bank’s capacity to manage inflation are critical for fostering economic resilience. These findings contribute to the literature on trade and inflation dynamics in fragile economies and offer practical policy guidance for Somalia’s long-term economic development.</p>

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The asymmetric effects of trade openness and inflation on economic growth in Somalia

  • 期刊论文

  • 发表日期：

    2026年5月22日

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  • Nasro Abdikarin Daud,
  • Abdikani Yusuf Abdulle,
  • Idriis SidAli Mohamed

摘要

Somalia faces significant challenges in achieving sustainable economic growth due to political instability, weak infrastructure, and ongoing conflicts. This study examines the asymmetric effects of trade openness and inflation on economic growth in Somalia, employing a nonlinear autoregressive distributed lag (NARDL) model to analyze annual data from 1980 to 2022. This research emphasizes Somalia’s vulnerability to external shocks and its dependence on international trade, which significantly influences its economic performance. The findings reveal that positive shocks to trade openness have a stronger positive impact on economic growth than negative shocks, while inflationary pressures, particularly negative inflation shocks, have a more detrimental effect on the economy. This study further investigates the role of key variables, such as foreign direct investment (FDI) and exchange rates, highlighting their significance in shaping Somalia’s economic stability. Based on these results, this study recommends policies that promote trade liberalization, control inflation, and invest in infrastructure to enhance Somalia’s resilience against external shocks. Strengthening institutions and improving the central bank’s capacity to manage inflation are critical for fostering economic resilience. These findings contribute to the literature on trade and inflation dynamics in fragile economies and offer practical policy guidance for Somalia’s long-term economic development.