The COVID-19 pandemics was the strongest shock faced by the world economy in many decades. The initial impact on international trade flows was very large and comparable to the one recorded in the 2008-2009 great trade collapse. As the pandemics evolved up to the first half of 2021, one salient feature was the recovery of international trade flows, which raised the hypothesis of adaptation by firms to prevailing restrictions. The impact of lockdowns was estimated in a regression that sets monthly growth rates of export flows for each pair firm-partner country (in relation to a reference period of the three years before the pandemics) as a function of the partner’s stringency index and deaths. The time-varying impact of lockdowns was estimated by interacting the stringency index with a set of six categorical variables that identify each of quarter between the beginning of 2020 and the first half of 2021.

The strongest negative impact of tighter stringency measures on exports was observed in the first two quarters of 2020 and became not statistically different from zero in the last two quarters of 2020, hinting at a progressive adaptation of international traders (Figure). However, with the third wave of the pandemics, the detrimental impact of lockdowns on export flows partly emerged in the first quarter of 2021 but it became non-significant in the following quarter.

For more details, see Amador, Gouveia and Pimenta (2021), “COVID-19, Lockdowns and International Trade: Evidence from Firm-Level Data”, Banco de Portugal Working paper no. 14.

Prepared by João Amador,  Carlos Melo Gouveia and Ana Catarina Pimenta. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

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