In its June Economic Outlook report, the OECD compliments New Zealand for its effective health system response to Covid-19, noting however that our ability to handle a severe outbreak would have been challenged by our lack of ventilator beds:
“The health system is easily accessible and the quality of care is high. Nevertheless, it has relatively few intensive care units with ventilators, making early intervention to stop the spread of the virus all the more important …
“The government should expand testing, tracing and isolation of infected people until they are no longer a risk to others to keep the virus at bay without the need for costly distancing measures, notably another lockdown. This should be complemented by requirements for people to wear masks in crowded places, as well as investments in the health-care sector so that it is better prepared to cope with any future surge in infection rates, should it occur.”
The report’s New Zealand discussion also notes the severe economic impact of our strict lock down.
Here’s the overview:
“The swift and decisive response against COVID-19 successfully contained the virus outbreak, saving lives and allowing the economy to reopen faster. However, confinement brought a number of sectors to a sudden stop in the second quarter. The economic recovery will be supported by substantial fiscal and monetary stimulus, but will remain sluggish, as high unemployment and weak business confidence hold back domestic demand and export growth is stymied by the collapse of international tourism.
“Assuming that there are no further virus outbreaks (the single-hit scenario), GDP is projected to shrink by nearly 9% in 2020 and only return to the pre-crisis level by the end of 2021. Should there be a second global wave of infections in the fourth quarter of 2020 (the double-hit scenario), GDP is projected to shrink by 10% in 2020 and to remain 3.5% below the pre-crisis level by the end of 2021.
“As the economy begins to recover, many workers will be jobless and numerous firms prone to insolvency. Fiscal measures to preserve jobs and prevent the bankruptcy of viable firms should remain in place until the recovery is firmly established, while fiscal and monetary policy should continue to support aggregate demand. Strengthening the capacity of the health sector to cope with a virus outbreak would also reduce the need for a shutdown in the event of another domestic virus wave.”
And finally, the OECD’s recovery advice to NZ:
“Should the government need to restart the wage subsidy scheme, it should spread payments to ensure that they are made only if employees continue to be paid, and also increase the share of costs borne by employers over time to reduce the risk of workers being trapped in jobs that are no longer viable. Fiscal and monetary policy should remain expansionary to support the recovery, all the more so in a double-hit scenario. Swift implementation of the increase in infrastructure investment announced in January would strengthen demand and create jobs and, with a greater focus on green investment projects such as the development of recharging infrastructure for electric vehicles, would also have environmental benefits. Restarting the subsidy scheme for improving home insulation, which in the past contributed to better health outcomes, would also be an efficient means to stimulate demand and employment growth.”