Coronavirus Economic Reverberations

February 25, 2020

Since our note on January 30, Predata has continued to track online perceptions of the coronavirus outbreak. Global attention to coronavirus trailed off steadily after the beginning of February despite being declared a global health emergency by the WHO. This complacency helps to explain the extent of yesterday’s reaction to the surge in reported cases in Italy, which prompted the WHO to warn that the world is not ready for a major outbreak as well as a sell-off in global financial markets.

TD Ameritrade Network featured our analysis on yesterday’s coronavirus market sell-off in an interview on Market on Close.

Global Audiences Lost Interest

Since early February, in addition to declining attention to coronavirus, interest in pandemics, the WHO, and past disease outbreaks such as SARS also dropped off. The steady lack of engagement amplified the difficulty faced by public health organizations, who struggled to convince their populations to prepare for an outbreak.

Initial Focus on Regional Impacts

As the number of reported cases surged in China and began to spread overseas, Predata detected increased attention to economies in the region poised for negative effects from the outbreak. Online audiences were particularly focused on the economies of New Zealand, South Korea, Singapore, and Australia.

At the same time, traffic on Chinese-language pages about the health ministries in China, Japan, Thailand, and Singapore reached historic highs, reflecting likely concerns over regional contagion.

Early Warning for Italy and Japan

There were some signs, however, that perceptions of the coronavirus threat were beginning to shift. On February 20, Predata alerted customers that global interest in the outbreak was increasingly driven by Italian- and Japanese-language audiences. Yesterday morning, four days after the Predata alert, Italian authorities reported a sharp spike in coronavirus infections. In light of the relatively low level of global attention to coronavirus, the news came as a severe shock, driving sharp losses in global financial markets.

What’s Next: U.S. Readiness and Economic Reverberations

Earlier today, the U.S. Centers for Disease Control warned the American public to prepare for a coronavirus outbreak. English-language attention to the CDC remains well below its peak from the end of January, which suggests U.S. public health officials face an uphill battle to raise awareness for preparedness efforts.

Globally, coronavirus appears to be amplifying latent macroeconomic concerns in affected countries. Notably, increased Japanese-language attention to coronavirus was followed by an uptick in interest in Japan’s ‘Lost Decade’ and Abenomics. Japan’s fourth quarter 2019 GDP decline came in much steeper than markets expected.

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