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Economic impacts of COVID-19 containment measures

Tom Stannard, Gregorius Steven, Chris McDonald


Containment measures are limiting the spread of COVID-19 and saving lives. It has come at a cost, however, of reduced economy activity. This paper outlines our estimates of the impact on GDP from each of the COVID-19 alert levels.

The impact ranges from an estimated 4 percent reduction in GDP under alert level 1 up to 37 percent of GDP under level 4. The paper also shows that the impact is not uniform across the economy, with some sectors more heavily effected than others such as tourism.

These estimates, and the assumptions underlying them, will inform the Reserve Bank’s projections and scenarios as it prepares for May’s Monetary Policy Statement (MPS).