Impact of the COVID-19 Pandemic on Economic Sentiment: A Cross-Country Study

ABSTRACT

This paper empirically analyzes the impact of the COVID-19 pandemic on economic sentiment by constructing an econometric model using monthly data from 36 countries from December 2019 to October 2020. The results of this study show: (1) After the outbreak of the COVID-19 pandemic, economic sentiment fluctuated greatly, and even turned pessimistic. (2) It has a significant negative impact on economic sentiment. (3) It, however, has a substantial positive impact on consumer confidence, a major negative impact on industrial confidence, and no significant impact on services confidence.

KEYWORDS:

• COVID-19 pandemic
• economic sentiment
• consumer confidence
• industrial confidence
• services confidence

Conflicts of Interest

The authors declare no conflict of interest.

Notes

1. WHO announced on March 13, 2020 that there were more than 132000 cases of COVID-19 from 123 countries and territories. https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-mission-briefing-on-covid-19—13-march-2020.

2. WHO Director-General’s opening remarks at the media briefing on COVID-19 on March 11, 2020.https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19—11-march-2020.

3. Severe Acute Respiratory Syndrome.

4. Github global COVID-19 database: https://github.com/CSSEGISandData/COVID-19.

5. National Health Commission of the People’s Republic of China:http://www.nhc.gov.cn/xcs/yqfkdt/gzbd_index.shtml.

6. Due to lack of data, Colombia, South Africa, Mexico and Indonesia use manufacturing production index as proxy variable.

7. These countries are Australia, Austria, Belgium, China, Colombia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Poland, Portugal, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.

8. This paper sorts the sample countries according to the monthly data of the cumulative number of confirmed cases of COVID-19 pandemic, and considers the number of sample periods and sample averages to select the following three groups of countries with severe pandemic. Eight Countries: France, Germany, Italy, Mexico, Russia, Spain, United Kingdom, United States. Nine Countries: France, Germany, Italy, Mexico, Russia, Spain, Turkey, United Kingdom, United States. Eleven Countries: Colombia, France, Germany, Italy, Mexico, Russia, South Africa, Spain, Turkey, United Kingdom, United States.

Additional information

Funding

This work was supported by the National Social Science Fund of China [No. 17VDL012 and No. 18ZDA095]; the Ministry of Education of China [No. 17JJD630001]; the National Natural Science Foundation of China [No. 71672051 and No. 71972063]; and the Interdisciplinary Research Funding Program for Doctoral Students of Jilin University [No. 101832020DJX008].