Australia markets open in 5 hours 13 minutes

The easing of lockdown conditions: what should we expect?

What will eased lockdown conditions look like? Source: Getty

Australia appears to have walked the tightrope of “flattening the curve” and now it faces the issue of restarting economic activity without causing a second wave of infections.

The longer these restrictions go on, the greater the economic damage. Consequently policy makers are not keen to not have these measures in place longer than necessary.

For example, the British government was spooked earlier this week with a startling prediction from its fiscal watchdog. If lockdown measures remained in place the entire second-quarter GDP could fall by 35 per cent.

The dilemma facing the Australian government now is whether it restarts economic activity sooner and risks a second wave of infections or weathers a bit more short-term pain to potentially avoid significantly prolonging the slowdown.

As New Zealand’s Kiwibank said earlier this week,” The biggest threat to exiting lockdown is the risk of lockdown again.”

“For businesses, it’s expensive to reopen, only to be shut down again in two weeks”.

It is also clear that some things about the economy and society will change forever. Most notably companies are likely to be more aware that a pandemic can hit without warning and fast.

There’s no definitive timeframe, but the issue of when businesses may be able to reopen is being discussed at today’s National Cabinet meeting.

Lessons learned

Consumer spending has been slashed considerably since the start of the COVID-19 outbreak, which has taken its toll on retailers in Australia and overseas.

Commonwealth Bank head of Australian economics Gareth Aird said that in the week to April 10, total credit and debit card spend was down by 20 per cent on year-ago levels.

Meanwhile, Chinese economic data has suggested the economy is “back to work”, but consumer spending has been that weak some local governments have felt the need to hand out digital vouchers.

In recent days a handful of countries in Europe have joined China in easing restrictions. This includes unscathed countries such as Denmark and the Czech Republic, as well as some regions of Italy.

While each country has different measures, we can expect to see new measures implemented, likely just as protective as the lockdown measures.

For example in Austria, it is now compulsory to wear masks in supermarkets and pharmacies.

The Czech Republic has allowed its citizens to go out but is still enforcing social distancing. While sports facilities have been allowed to re-open, no more than two people can play together in a group.

It imposed a ban on its people leaving the country but will now let people leave if the travel can be justified and will still impose a 14-day quarantine when they return.

The virus is here to stay

But lifting the restrictions will not mean saying goodbye to the virus, or at least the threat of it. Governments will have to ensure that they can cope with a second surge in infections.

An EU Commission document obtained by the BBC recommended economies have enough intensive care units to cope with a second surge in cases as well as adequate testing capabilities.

For more articles like this, please visit us at Stockhead.com.auSubscribe now to stay ahead with the latest stock news and insights.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.

Follow Yahoo Finance Australia on FacebookTwitterInstagram and LinkedIn.