International Monetary Fund (File photo: Reuters)
Lifting lockdowns is unlikely to result in a decisive and sustained economic boost if COVID-19 infections are still elevated, as voluntary social distancing will likely persist, the International Monetary Fund (IMF) said in a new research at the IMF and World Bank annual meetings.
According to the research, lockdown measures that aimed to contain the COVID-19 outbreak were a double-edged sword. While they helped curb the spread of the pandemic, they contributed in the slowdown of the global economy.
The research is included in the IMF’s World Economic Outlook report, expected to be released next week.
The measures have also contributed to recession and have had disproportional effects on vulnerable groups, including women and youth.
The research added that the economic recession was also largely driven by people voluntarily avoiding social interactions as they feared contracting the virus.
It showed that lockdowns and voluntary social distancing contributed equally to the decline in mobility during the first three months of the pandemic.
Voluntary social distancing was larger in advanced economies where people can work from home more easily or can even afford to stop working thanks to personal savings and social security benefits, while people in low-income countries are often unable to opt for voluntary social distancing as they do not have the financial means to deal with a temporary income loss, according to the research.
Additionally, lockdowns and voluntary social distancing contributed substantially to the fall in labour demand.
The research called for reconsidering the prevailing narrative about lockdowns involving a trade-off between saving lives and supporting the economy, which neglects that effective lockdown measures taken early during an epidemic may lead to a faster economic recovery by containing the virus and reducing voluntary social distancing.
“These medium-term gains may offset the short-term costs of lockdowns, possibly even leading to positive overall effects on the economy,” said the research.