Australia | Capital city lockdowns are not derailing the recovery

Beginning with the Northern Beaches COVID cluster, most state governments have imposed snap lockdowns in their capital cities since late December. In general, these lockdowns have been spurred by concerns that COVID-19 infections had spread from returned travellers to the wider community. Each lockdown has successfully suppressed transmission, avoiding broader and more protracted lockdowns such as Melbourne’s shutdown in July – October last year, that had a large impact on the recovery trajectory.

What you will learn:

• To maintain Australia’s strong health record through the COVID-19 pandemic, each of the major capital cities has endured a snap lockdown since late December 2020. These lockdowns have been accompanied by restricted interstate travel, and in some instances hard border closures.
• The data currently available for this period suggest these lockdowns have increased volatility in the range of economic outcomes from month to month. But they do not appear to be derailing the recovery. Lockdowns have shifted the timing of retail sales, rather than materially affecting the level.
• Nevertheless, travel restrictions provide an unwelcome source of uncertainty for businesses, which will weigh on capital expenditure decisions. But for now, hiring decisions appear to be unaffected.