Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249601 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
BOFIT Discussion Papers No. 12/2021
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
We examine the role of demand composition in explaining the trade collapse and recovery during the ongoing covid-19 crisis. We apply an import-intensity-adjusted measure of demand to examine import trends in 40 advanced and emerging economies over the period 1Q95 to 4Q20. We focus on the crisis periods related to covid-19 and the global financial crisis in 2008-2009. As during the global financial crisis, we find that import-intensity-adjusted demand is a key factor contributing to trade developments during the covid-19 crisis. The analysis also reveals substantial differences between the current crisis and the global financial crisis. Trade decline during the global financial crisis was heavily investment-led. In the current crisis, consumption and import demand from the service sector have had much larger roles. The recovery of trade has been notably faster during the covid-19 crisis and led by exports as opposed to the much more important role played by domestic demand during the global financial crisis.
Subjects: 
International trade
covid-19
import-intensity-adjusted demand
JEL: 
F10
F14
F17
G01
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-386-7
Document Type: 
Working Paper

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