Natural resources volatility and South Asian economies: Evaluating the role of COVID-19.

Since the emergence of the Covid-19 pandemic, global economic performance has been severely affected, which also causes natural resource price instability. Recently, scholars and policy-makers put more attention towards the global economic performance and natural resource volatility nexus. This study investigates four South Asian economies (Afghanistan, Bangladesh, India, and Pakistan) from 1991 to 2021. Using the (Pesaran, 2007) CIPS unit root test, the study found first differenced stationary data cointegrated as confirmed by the (Westerlund, 2007) cointegration test. However, this study employed the CCEMG approach to identify the association of natural resource volatility and economic performance in the selected region. Empirical results revealed that total natural resource rents, forest rents, and oil prices negatively and significantly affect economic performance. While oil rents, coal rents, and natural gas rents have a significant contribution to the region's economic performance. Results further illustrate a bidirectional causal association between economic performance and other variables except for coal rents, which is unidirectional. Based on the empirical findings, the current study acclaims some practical implications that could potentially reduce the negative influence of natural resources volatility on economic performance.