GP Insights # 348, 2 May 2020
Australia and New Zealand have efficiently contained the spread of the Coronavirus. An extensive testing process and stringent measures have productively brought down the number of active cases and have motivated the respective governments to relax the restrictions on its citizens.
Since 27 April, New Zealand has moved from lockdown "Level 4" to "Level 3" facilitating small businesses and schools to run on a limited capacity. Similarly, Australia has relaxed restriction and permitted the residents to visit their relatives and friends. On 1 May, the Australian Prime Minister said that there would be further considerations to ease the lockdown measures. Both countries have issued strict instructions to the public to maintain social distancing and hygiene. New Zealand might open its borders to Australian citizens, creating a travel bubble between both countries, once the virus is contained.
What is the background?
Both Australia and New Zealand had closed its borders and ports on 19 March. The returning citizens and residents were required to self-isolate for a period of two weeks. In Australia, only the supermarkets, clothing stores, chemists and beauty salons were allowed to remain open while cafes and restaurants were restricted to take-away only. Whereas in New Zealand, a four-level alert system was introduced on 21 March to manage the outbreak.
The alert level was initially set at "Level 2", but was subsequently raised to "Level 3" on 23 March. The alert level was then moved to Level 4" on 25 March, putting the country into a nationwide lockdown.
What does it mean?
First, the reopening of the economy is vital and necessary, since the world is not only threatened by the virus but also a worldwide recession. Both the countries cannot afford a spike in the COVID-19 cases as it will impact the economies of both countries to the extent of a slower growth rate.
Second, the pandemic could only be battled if the citizens ensure social distancing and self-isolation in adverse cases. The rate at which the virus has been spreading from the existing cases is relatively high, and it is prudent to remain cautious.
Third, Australia has been successful in containing the virus by limiting the restriction to social gatherings and hence the economy is functioning better. New Zealand had imposed a complete lockdown; therefore, it is evident that it might take time to recover its trade. Consequently, Australia's economy may perform much better than that of New Zealand. However, both countries will recover well by 2021. An inward-looking strategy may be appropriate in boosting consumer demand, which can sustain the economy until the pandemic is contained in the rest of the world.