A tale of two crises: An early comparison of foreign trade and economic activity in EU countries

In this article, we compare two episodes of decline in domestic economic activity and foreign trade in EU countries: the 2008/2009 global financial crisis and the current downturn in economic activity related to the coronavirus pandemic. The current crisis is characterised by a higher degree of synchronisation of the impact across countries. This is natural, as the administrative measures were introduced almost simultaneously in European countries. Although the driving forces of the two crises are different, there are many similarities in the dynamics of foreign trade. On the other hand, the current crisis differs substantially from the global financial crisis in that trade prices have fallen much less sharply. This means that the current crisis is partly also a negative supply shock.