The Implications of Covid-19 on the Imports of Oil from Saudi Arabia: The Case of Highest-importer Asian Countries

Abstract

There is a widespread consensus that COVID-19 pandemic is an unprecedented global crisis, as it has triggered waves of economic recession worldwide. Since the onset of the pandemic and until recently, a heightened theoretical debate about the dynamics and the economic implications of the pandemic is going on. In the context of this newly emerged literature on the macroeconomics of pandemics, the differences in the numbers of infection cases, along with the associated containment measures of the pandemic, are considered key factors to interpret the extent and magnitude of the adverse economic impacts. The objective of this study is to deliver a theoretical interpretation as well as empirical evidence about the implications of the global recession triggered by the pandemic on international trade with special emphasis on the exports of oil commodities from Saudi Arabia. To do so, an auto-regressive distributed lag (ARDL) econometric model was applied to data about the monthly infection cases of some Asian Countries with the previous highest record of oil imports from Saudi Arabia for the period from January 2019 to December 2022. These countries include China, Japan, South Korea, and India. The findings of the study indicate the existence of an indirect negative relationship between the number of corona infection cases in the selected countries and the quantities of oil imports from Saudi Arabia. In the short-run, an increase of one unit in corona cases is associated with a decrease of 0.08 in the quantity of oil imported from Saudi Arabia, while in the long-run an increase of one unit in corona cases, is associated with a decrease of 0.39. In addition, the findings indicate that the recession associated with the pandemic containment measures reflects a W-Shaped or double dip pattern.