The Unseen Ripples: Examining the Links Between COVID-19-induced Disruptions and Trade Dynamics in Asia-Pacific Countries

The global COVID-19 epidemic and the strategies that were adopted to restrict its spread, such as lockdowns, had a significant impact on international trade. While the health crisis and the lockdown restrictions were linked, their repercussions on world trade patterns were distinct. This study examines trade data from 30 Asian-Pacific countries to examine how the COVID-19 pandemic affected their trading patterns. In addition, it looks at the effects of COVID-19-related policies on trade flows and explores the causality between changes in trade flows and policies induced by COVID-19. The cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model, Juodis, Karavias, and Sarafidis (JKS) causality test and Dumitrescu–Hurlin causality test were employed to examine trade patterns of the Asia-Pacific amidst the COVID-19 pandemic. The results of CS-ARDL model showed that COVID-19 cases, deaths and policy-related indices induced a noteworthy and negative influence on export and import flows of Asia and Pacific both in the short- and long run. However, with few exceptions, on average, the impact of COVID-19-related measures is far bigger than that of COVID-19 deaths as well as cases in the long run. Further, the study found that the COVID-19 cases, deaths and COVID-19 policy-related measures have a Granger-causal relationship with exports and imports. Therefore, fostering regional cooperation, strengthening trade agreements and prudent management of COVID-19-induced policies will be essential in a crisis like COVID-19 to streamline trade processes and to achieve the optimum level of exports and imports.

JEL: F14, H12, I10, I18