2025/07/03 by Manasseh, Charles, Logan, Chine, Ikeyi, Adachukwu +4
#Covid-19 risks #climate risks #emerging markets #trade balance
paper · doi:10.71637/tnhj.v25i2.914
Background: This study examines the impact of the Covid-19 pandemic and climate threats on trade balances in 39 emerging economies, covering the period from December 2019 to April 2021. Methods: The panel autoregressive distributed lag (ARDL) model is employed as the baseline method, with dynamic generalized method of moments (GMM) and ordinary least squares (OLS) used for robustness checks. Results: The PMG study reveals significant impacts of key variables on the trade balance. A 1% increase in Atmospheric Carbon Dioxide Concentration (ACDC) leads to a 61.9% decrease in trade balance, while a 1% rise in the Covid-19 Index (CI) results in a 26.4% drop. The Covid-19 Uncertainty Index (CUI) causes a 39.7% fall, and a 1% decrease in Surface Temperature Change (STC) leads to a 58.7% loss in trade balance. However, a 1% rise in Sea Level Change (CSL) results in a 27.4% increase, suggesting potential benefits for countries with modern coastal infrastructure. Interaction effects show complex dynamics, with PMG showing negative coefficients, MG detecting a negative link between CUI and ExGr, and DFE revealing positive interactions between CI and ExGr. Results from the dynamic GMM and OLS models confirm the robustness of these findings. Conclusion: The Covid-19 pandemic and climate threats exert a negative and long-term inverse impact on trade balances in emerging economies. Policy recommendations include implementing strategies to mitigate the adverse effects of Covid-19 and climate-related risks on trade while promoting economic stabilization without worsening trade imbalances