Have International Trade and Tourism Been Affected by the COVID-19? The Case of Japan

Abstract

The relationship between international trade and exchange rates has been discussed a lot in the past. In general, depreciation (appreciation) of the currency promotes (reduces) exports, and depreciation (appreciation) of the currency reduces (promotes) imports. This idea has also been supported all over the world empirically, however, two issues have recently occurred, namely COVID-19 and inflation. Both of them have impacted the world economy. This study examines the effects of these issues on international trade in Japan. The empirical results show that the relationship between COVID-19 and international trade was not found to be significant in Japan. Moreover, inflation in Japan has not significantly damaged exports. Of course, these two issues have damaged some sectors of the economy, however, international trade has not significantly declined. Japan has suffered damage due to a temporary decline in international trade and damage to supply chains, but the damage was successfully minimized. Tourism has had restrictions imposed, however, the number of infected persons and domestic policies to prevent the pandemic have not significantly impacted inbound travel.