Strict lockdowns may speed up economic recovery: IMF

Early lockdowns in an epidemic can substantially reduce infections, and policymakers should be wary of lifting them to jumpstart their economies when infections remain high, the International Monetary Fund said on Thursday.

The COVID-19 pandemic showed that government lockdowns succeeded in lowering infections, the IMF wrote in a chapter of its forthcoming World Economic Outlook, but they also contributed to the recession and hit vulnerable groups such as women and young people particularly hard, reports Reuters.

Voluntary social distancing driven by fears of contracting the disease also contributed heavily to the recession and was unlikely to recede if lockdowns were lifted while cases remained elevated, the researchers warned.

 “Addressing the health risks appears to be a pre-condition to allow for a strong and sustained economic recovery,” wrote IMF economists Francesco Grigoli and Damiano Sandri in a blog post on the research.

 “Lockdowns impose short-term costs but may lead to a faster economic recovery as they lower infections and thus the extent of voluntary social distancing,” they wrote, adding that alternatives such as wearing face masks, expanded testing and contact tracing could have even lower economic costs.

The IMF research did not single out specific countries, but comes as infections are rising sharply in parts of the United States that moved to end lockdowns early amid pressure from US President Donald Trump, who was determined to boost the economy ahead of the November 3 presidential election.

India, second only to the United States in coronavirus infections, is also lifting most restrictions even as the pandemic rages.

The IMF said lockdowns needed to be sufficiently strict to curb infections, suggesting that “stringent and short-lived lockdowns could be preferable to mild and prolonged measures,” they wrote.

The crisis was hitting more vulnerable groups harder, they noted, with stay-at-home orders and school closures curbing mobility more sharply among women, who shouldered more of the burden in caring for children.

Lockdowns also reduced the mobility of younger people aged 18 to 44 more sharply, since they had younger children affected by school closures and often had temporary job contracts that were more likely to be terminated during a crisis.

To prevent long-lasting wider inequality, decision-makers should look to strengthen unemployment benefits and offer paid leave to parents.