Coronavirus: Study reveals economic impact of global lockdowns from Covid-19
A new study suggests that New Zealand would have experienced an economic hit even if Covid-19 had been confined to China.
Lead author Dabo Guan and his colleagues used an economic disaster model to quantify the short-term effect of different containment methods on global supply chains to investigate how pandemic-related losses would be distributed along supply chains.
The researchers found that countries not directly affected by the virus would still experience large economic losses as a result of containment policies in countries that were directly affected.
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The study also found that low and middle-income countries were more vulnerable to indirect effects.
The authors modelled 39 individual scenarios based on four sets of containment scenarios.
Three sets were based on the geographical spread of the virus, duration of lockdown and strictness.
The fourth set modelled the potential impacts as lockdowns eased, including possible damage if restrictions were in place for a longer period of time or had to be reintroduced.
In one scenario, the study found that even if the virus and lockdowns had been confined to China, its economic impacts would not have been, with New Zealand experiencing a 2.2 per cent value-added loss.
This particular scenario involved a lockdown with 80 per cent strictness for two months in China due to the decline in China’s output and a decrease in China’s final demand for their products.
In a scenario in which a two-month lockdown of 80 per cent strictness had been implemented only in China, the authors found that the supply chain effect would have been 3.5 per cent of global GDP.
However, this increased to 26.8 per cent if the scenario were enforced globally. Increasing the duration of an 80 per cent lockdown from two to four months increased the global economic losses from $20 trillion to $22.7 trillion.
The authors also modelled three recovery scenarios for the lifting of restrictions, and found that lifting them over a 12-month period with a 20 per cent reduction in labour and transportation, resulted in lower losses than lifting restrictions quickly and then having to reintroduce lockdown.
They found that in the United States for example, forecast losses from lifting the restrictions slowly over 12 months were 24.6 per cent to 54.8 per cent less than if restrictions were lifted quickly and had to be reintroduced.
"Earlier, stricter and shorter lockdowns can minimise overall losses. A ‘go-slow’ approach to lifting restrictions may reduce overall damages if it avoids the need for further lockdowns," the study states.
"Regardless of the strategy, the complexity of global supply chains will magnify losses beyond the direct effects of Covid-19. Thus, pandemic control is a public good that requires collective efforts and support to lower-capacity countries."