Australia’s “zero Covid” approach will cost AU$1bn (£530m) per week to the country’s economy, as its three most populous states are currently in lockdown due to a surge in the delta variant.
Economists at the UBS bank have said the cumulative economic cost of the current lockdown in New South Wales will be of AU$25bn (£13bn), The Telegraph reported.
Forecasters warned that the renewed lockdown measures and slow vaccination rollout will result in a sharp fall in the country’s GDP for the third quarter. Just under a fourth of Australian adults have been fully vaccinated.
The looming economic cost of the restrictions is already apparent in retail sales and payroll data, according to George Tharenou, a chief economist at UBS in Sydney. He estimated that up to a weekly AU$1.5bn (£794m) in government support will be needed to buttress the economy.
“A third Covid-19 wave in Australia, especially in New South Wales, materially increases uncertainty of the economic outlook, with hard lockdowns by state governments each time cases appear,” Tharenou told The Telegraph.
Analysts have warned that restrictions could last until October as the eastern states of Victoria and Queensland are also struggling to contain a surge in cases of the variant.
Around 60 per cent of Australia’s population is currently under strict lockdown restrictions. Sydney is in its seventh week of stay-at-home measures as a further four weeks were added towards the end of July.
The spread of the delta variant is posing a threat to countries previously praised for their taming outbreaks with zero Covid tolerance strategies and border closures.
Australia and China, which had reopened earlier this year, are now under strict restrictions to contain the jump in infections. The surge in the highly transmissible coronavirus variant seems to be dramatically increasing the cost of upholding once-successful policies.