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More Covid-19 jabs ‘mean robust economies’, say economists

Countries with high vaccination rates that have moved to living with Covid-19 are enjoying solid economic recoveries, economists say.

English football fans are back in the stadium, and the economy is growing quickly after opening up despite ongoing Covid-19 infections. Picture: Getty Images
English football fans are back in the stadium, and the economy is growing quickly after opening up despite ongoing Covid-19 infections. Picture: Getty Images

Countries with high vaccination rates that have moved to living with Covid-19 are enjoying solid economic recoveries, economists say, a model for what will be possible in Australia.

Mobility data collected by ANZ shows how Australia’s lockdowns have sent activity plunging, even as highly vaccinated populations enjoy greater freedoms.

In Germany, where the inoculation rate is about 64 per cent – about equivalent to the upper threshold of 80 per cent of adults targeted under the Doherty Institute model – mobility is 80 per cent above pre-pandemic levels.

Similarly, in Britain, where vaccination rates are over 60 per cent, mobility is tracking 50 per cent higher than pre-Covid levels amid a robust rebound that the Bank of England believes will put the UK economy on track later this year to totally recoup the devastating hit to GDP endured in 2020.

In the initial phase of the pandemic, economists widely agreed that there was no trade-off ­between health measures and economic outcomes: not locking down would lead to economy-wrecking rates of infection and hospitalisation.

But the rapid rollout of vaccines across developed countries has changed that arithmetic.

Scott Morrison on Friday said Treasury analysis had made clear that once the Doherty vaccination thresholds were crossed, and in particular the 80 per cent inoculation mark, “that it is against the country’s and indeed the states’ and territories’ economic interests to impose further lockdowns”.

“It actually becomes a more costly way of achieving a similar health outcome and that the balance of risk, both on health and economic grounds, is away from that old way of doing things,” the Prime Minister said.

ANZ chief economist Richard Yetsenga said the international evidence showed you could have positive health and economic outcomes without resorting to lockdowns.

“If you are vaccinated, yes, you can definitely have both,” he said. “Europe has been recovering very smartly, and continues to recover. On average, Europe looks to be managing the vaccine rollout relatively well.”

 
 

Westpac head of international economics Elliot Clarke said “from a purely economic perspective, the reopening stories have been a big success” in the US, ­Europe and Britain.

In contrast, Australia’s ­mobility index has sagged to 40 per cent below levels recorded before the pandemic, according to ANZ, with the associated hit to the economy threatening the ­nation’s position as a standout performer through the health ­crisis.

After recouping the hit to GDP as early as March, Delta lockdowns will send the Australian economy backwards by as much as 3.5 per cent over the three months to September,­ ­according to the latest estimates from private forecasters.

Australian National Univer­sity professor Warwick McKibbin warned that making direct ­comparisons between Australia and other countries was complicated, as much worse health results last year in places such as England and Switzerland had provided a level of herd ­immunity – and therefore additional protection – that was ­absent here.

Mr McKibbin said that Singapore was the poster child for managing the transition with high vaccination rates.

Singapore’s clear strategy out of strong restrictions, and a strong vision of what life would look like, were hallmarks of a successful plan, he said.

Read related topics:CoronavirusVaccinations

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Original URL: https://www.theaustralian.com.au/business/economics/more-covid19-jabs-mean-robust-economies-say-economists/news-story/126d3431d1d98b31c54b3c5fa9ae59c2