The Impacts of Lockdown Policies on International Trade in the Philippines

The Philippines was among the most infected countries in East Asia at the onset of the COVID-19outbreak. This study analyzes how international trade on various margins was affected by the country’s own lockdownpolicies and those of trading partners. Using a monthly series of product-by-country data for the period fromJanuary 2019 to December 2020 and an event study design, the paper shows that domestic lockdown measures did not affectinternational trade but external lockdowns affected both ex- ports and imports. The introduction of lockdown measures bytrading partners affected imports more than exports, leading to 7 and 56 percent monthly average drops in export andimport values, respectively. Restrictions on internal movements and international travel controls in partnercountries were responsible for the drop in exports. The slump in imports was because of workplace closure,stay-at-home requirements, restrictions on internal movement, and international travel controls by tradingpartners of the Philip- pines. Intermediate goods were the key driver of the drop in imports following foreignlockdowns, reflecting supply disruptions in backward global value chain participation. At the same time, exports ofintermediate goods were more resilient to the lockdown policies. Finally, both exports and imports were moreaffected at the extensive margin than the intensive margin, as lockdown measures hindered interactions among people, inturn reducing the potential of businesses to create new relationships and launch new products in foreign markets.Overall, diversified and geographically dispersed suppliers can help countries adjust better to future disruptions.