The Impact of Russia's Economic Policy Uncertainty on Bilateral Trade With the GCC Countries

While literature focuses on the domestic consequences of EPU, its international propagation through trade linkages remains underexplored, particularly for major oil-exporting regions. Using a local projection framework and monthly data from 2002 to 2025, this study estimates country-specific impulse response functions for bilateral exports and imports while controlling for global oil price dynamics. The empirical results reveal that shocks to Russian EPU generate contractions in bilateral trade, materializing within months and persisting over the short-to-medium run before dissipating. A key finding is the asymmetry in responses is that GCC exports to Russia exhibit larger and more persistent declines than imports from Russia, suggesting a dominant demand-side transmission channel. Furthermore, results highlight pronounced heterogeneity, with smaller, less diversified GCC economies experiencing more severe trade disruptions than larger counterparts.