Big drivers of export and import volumes How have these relationships shifted amidst large shocks

Lesego Chanza, Koketso Mantsena and Mpho Rapapali

No 11058, Occasional Bulletin of Economic Notes from South African Reserve Bank

Abstract: In this economic note, we uncover changes to the big drivers of export and import volumes. We also use an error correction model to determine how the elasticities have changed over time. After co-moving with trading partner GDP, export volumes decoupled from this relationship in 2015 and tracked mining production. The economic recovery after COVID-19 saw export volumes rebound away from mining production towards global growth. However, export volumes are still constrained by domestic factors. The GFC and COVID-19 interrupted the positive relationship between import volumes and real domestic demand, albeit temporarily. The ECM results show that elasticities of export and import volumes declined after the GFC and COVID-19. The speed of adjustment to long-run equilibrium also decreased after both shocks.

Date: 2024-04-25
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