Floods and Exports: An Empirical Study on Natural Disaster Shocks in Southeast Asia

Abstract

This study analyzes the effects of climate-related disasters on international trade in Southeast Asia. We use monthly trade data to examine the relationship between disaster shocks and bilateral export flows. The empirical analysis shows that natural disasters have a significant negative effect on exports. The estimation results suggest that floods cause an immediate decrease in exports by 3–5% of monthly mean export values. In addition, the effect persists in the post-disaster period, with floods causing annual export losses of 2% of average export values. We further investigate the impact of disasters by product group, and show that disasters are negatively associated with the exports of agricultural and manufacturing products. The findings suggest that extreme weather events have severe repercussions on Southeast Asia, where exports play an important role in economic development.