From unemployment to low tourism, Covid-19 outbreak has definitely affected many economies in the world. According to a research done by PWC, the pandemic is estimated to reduce Australia’s GDP by $34.2 billion over a year. Furthermore, almost 20 countries in the world are in recession, including some leading economies such as America and United Kingdom. The reality is that there are always trade-offs between flattening the Covid-19 curve and achieving economic growth. The question remains; Which of the two should be prioritised by a government?
You can’t have your cake and eat it too. This famous saying perfectly summarises the dilemma faced by many governments. Take Indonesia for example. With thousands of new cases of Covid-19 each day, Indonesia still does not have any lockdown measures in place. With Around 26.42 million Indonesians still living below the poverty line, it may be difficult for Indonesian government to pause businesses from operating and giving financial support for families and small businesses. On the other side, hundreds of healthcare workers are dying from the virus and the number of cases is increasing rapidly each day which could have been slowed down with certain lockdown measures. So, how does a government win in this case?
The answer is by flattening the curve of Covid-19 cases, the faster it is for an economy to recover. By looking at how New Zealand government handled the outbreak, we can see that a country can definitely recover from the damage done by Covid-19 outbreak. With a strict lockdown measures at the start of the outbreak, New Zealand has come out stronger than before with less than 50 active cases as of October 2020. Although it took a lot out of their economy throughout the lockdown, New Zealand’s GDP is expected to grow by 12.2% in the last quarter of the year.
Looking at how the two countries have been handling Covid-19, we can see that solving Covid-19 should come first for a long-term economic recovery. By prolonging the implementation of lockdown, economic slowdown will go on and on until vaccinations are perfected and widely distributed. A government should just rip off the band aid, apply strict lockdown measures and recover afterwards.