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NZ's economy would've suffered even without Covid-19 lockdown, study finds

New Zealand would have experienced economic losses even if Covid-19 was only confined to China, a new study suggests.

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People are spending more, but for many businesses it’s still not enough. Source: 1 NEWS

Many have argued that New Zealand could have avoided the economic downfall its seen because of the virus if it had followed containment strategies from other countries like Australia or Sweden. 

Sweden opted for "herd immunity" early on in the pandemic and kept its economy running by only asking people to work from home if they could, and to stay at home if they were sick. Only gatherings of more than 50 people have been banned.

Australia's strategy was far more similar to New Zealand's, but the nation never went into a complete lockdown.

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Author Dabo Guan and colleagues used an economic disaster model to quantify the short-term effect of different containment methods on global supply chains and to investigate how pandemic-related losses will be distributed along supply chains. 

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More than 37,000 jobs were lost last month amid the nationwide Covid-19 lockdown. Source: 1 NEWS

The study found that countries not directly affected by the virus experience large economic losses as a result of containment policies in countries that are directly affected.

Research also found that low and middle income countries are particularly vulnerable.

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Paul Bloxham of HSBC Australia says New Zealand’s lockdown efforts could pay off, money-wise. Source: Breakfast

"The length of Covid-19-related lockdown measures and the number of countries in which they are implemented have a greater impact on global supply chains than the severity of the restrictions," according to the study. 

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The research also suggests that gradually easing Covid-19 containment measures that could eradicate the disease generates smaller losses, rather than lifting restrictions quickly and then having to reintroduce lockdown.

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Revenue for small businesses has plummeted 34 per cent in April, Xero's Craig Hudson told Breakfast. Source: Breakfast

New Zealand's Covid-19 containment measures have been gradual to date by using the alert level system. At present, the country is at Level 2, with restrictions still in place preventing the economy from functioning as it did before Covid-19.