In a recent economic note, researchers have analyzed shifts in the primary drivers of export and import volumes. The study utilized an error correction model to assess changes in elasticities over time.
The findings indicate that export volumes, which traditionally moved in tandem with trading partner GDP, began diverging from this pattern in 2015. Instead, they started aligning more closely with mining production. However, following the economic recovery post-COVID-19, export volumes have begun to realign with global growth trends. Despite this shift, domestic factors continue to constrain export volumes.
The analysis also highlighted that both the Global Financial Crisis (GFC) and COVID-19 temporarily disrupted the positive relationship between import volumes and real domestic demand. According to the error correction model results, elasticities for both export and import volumes decreased after these major shocks. Furthermore, the speed at which these variables adjust back to long-run equilibrium has slowed since these events.