Analysis: The economic impact of containment measures has been greatly exaggerated

Containment rules and other government protective measures against COVID-19 do not inflict as much economic damage as they are said to be. In fact, they even reduce them the more they are strict and enforced early. This means that the bulk of the impact of the pandemic is coming from elsewhere, and the effects of the pandemic will only go away with it.

Since the onset of the new coronavirus, the authorities have been constantly weighing the best way to slow down its progress without undermining economic activity too much. After months of bans on international travel and large public gatherings, closings of businesses, schools and offices, and even, at times, home containment measures, most people would likely conclude that ‘we have chosen to focus on the fight against disease at the cost of the worst economic recession since the Great Depression. However, these people would be wrong, concludes the International Monetary Fund (IMF) in an analysis unveiled Thursday. Or at least not quite right.

Based on daily data on population movements and job vacancies, IMF researchers found that these tools in the public fight against COVID-19 globally only accounted for half of the decrease in economic activity, even for just over 40% in industrialized countries, where a higher proportion of the population has access to teleworking as well as to personal savings or a social safety net that makes it easier for them to choose to stay at home.

Because there you are. For more than half of the economic downturn during the first three months of the pandemic in rich countries, the collapse in economic activity was not the act of governments, but the result of individual citizens’ decisions to push back. trip they had planned, not going to a restaurant for a while, avoiding shops and the city center as much as possible, in short, taking advantage of all the opportunities offered to stay at home for fear of catching this terrible virus.

The problem is the virus

This finding helps to understand why the recovery in economic activity is so sluggish when governments relax their restrictions, says the IMF. In fact, it shows that we cannot hope for a real return to economic normalcy until the threat of COVID-19 is lifted.

In data | To know everything about COVID-19

However, while waiting for a vaccine or medical treatment to deal a fatal blow, the most effective way to stem the spread of the virus seems precisely to be the rules of containment and social distancing of governments, especially when they are muscular and implemented as early as possible, our researchers note. Thus, not only are these control measures not the only ones responsible for the economic effects of the pandemic in the short term, but they prove, probably, the best means of erasing at least part of this devastation by ensuring the conditions of an economic recovery in the medium and long term. It’s the world upside down.

The victims of the crisis

Our researchers do not yet know if more targeted means of fight, such as testing and contact tracing systems, the imposition of the wearing of a mask, teleworking assistance, or more localized confinement rules, can also be effective while being less damaging economically. They also note in passing that their study does not take into account other negative consequences that these control measures may have, for example in terms of academic success or mental health.

What they do know, however, is that not all are equal in the face of COVID-19, and that its main economic victims include women, young people, vulnerable workers, members of minorities and immigrants. And as the coronavirus will continue to weigh on growth and jobs until it has been defeated, whether or not containment and social distancing measures are imposed by governments, they will have to continue to do so. provide assistance to its victims.

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