Econometric Analysis and Forecasting of Madagascar’s Economy: An ARIMAX Approach

This research conducts an in-depth econometric analysis of key economic indicators in Madagascar, with a specific focus on Gross Domestic Product (GDP) and the USD exchange rate (USD/MGA). Employing the rigorous Box-Jenkins methodology with ARIMAX modeling, we meticulously examine historical trends, model time series data, and provide forecasts for the year 2023. Our analysis notably highlights a projected decline in Madagascar’s GDP for the year 2023, shedding light on the potential repercussions of various factors such as impending presidential elections and ongoing challenges like electricity shortages. These factors have the potential to exert a significant influence on the trajectory of the country’s economy. While ARIMAX models constitute invaluable tools for forecasting, we underscore the necessity of incorporating a more expansive array of econometric methodologies to bolster economic resilience and inform policymaking. This study underscores the critical importance of combining data-driven modeling with a profound understanding of the contextual intricacies that characterize Madagascar’s intricate economic landscape. Moreover, it extends its relevance to other emerging economies facing similar complexities and challenges.