Do lockdowns work?

Written by Ciaran Ryan. Posted in Journalism

In halting the spread of the virus, the evidence is patchy. In strangling economies, that’s more certain. From Moneyweb.

While they are justified as necessary to save lives, the economic effects of lockdowns are devastating, with spending plummeting to all-time lows. Image: Waldo Swiegers, Bloomberg
While they are justified as necessary to save lives, the economic effects of lockdowns are devastating, with spending plummeting to all-time lows. Image: Waldo Swiegers, Bloomberg

Recent research by accounting software company QuickBooks provides a fascinating view into the global impact of Covid-19 lockdowns on economic performance.

The table below lays it out. It compares days in lockdown with expected economic performance in 2020.

Russia’s economy is expected to contract 26% this year with just 43 days in lockdown. The UK went 99 days in hard lockdown and its economy is likely to contract 19% this year.

Then comes SA: a 16% economic contraction with 60 days of lockdown (before lockdown restrictions were relaxed).

The hard lockdowns and shuttering of businesses such as restaurants and hotels had a devastating economic impact.

Difficult decision

“Policymakers have had the difficult decision of when to implement lockdown, the severity of restrictions, and how long to keep measures in place for,” says the QuickBooks study.

“Lockdown restrictions have been met with both open arms and criticism in places all over the world. For example, in South Africa, the strictest measures were put in place to combat some of the highest levels of the virus. The country banned the sale of alcohol and tobacco.”

The countries with the most severe economic contractions are:

  1. Russia (26%)
  2. UK (19%)
  3. South Africa (16%)
  4. Spain (14%)
  5. Hungary (14%)

The countries with the lowest economic contraction of GDP are:

  1. Australia (5%)
  2. Switzerland (8%)
  3. Canada (8%)
  4. Italy (10%)
  5. Norway (11%)

The UK experienced the longest lockdown, followed by Spain.

Three of the five countries that have spent the least amount of time in lockdown have experienced the lowest contraction in GDP. Switzerland experienced 42 days in lockdown, and Australia and Canada 49 days.

CountryDates in lockdownDays in lockdownGDP 2019 ($)GDP 2020 forecast ($)% change
Russia30 March – 12 May431 700 billion1 250 billion-26%
UK16 March – 23 June992 827 billion2 280 billion-19%
South Africa26 March – 25 May60351 billion295 billion-16%
Spain14 March – 20 June981 394 billion1 200 billion-14%
Hungary28 March – 6 June70161 billion139 billion-14%
France17 March – 11 May552 715 billion2 400 billion-12%
Germany22 March – 20 April293 845 billion3 400 billion-12%
Norway12 March – 15 June95403 billion360 billion-11%
Italy9 March – 18 May702 001 billion1 800 billion-10%
Canada16 March – 4 May491 736 billion1 590 billion-8%
Switzerland16 March – 27 April42703 billion650 billion-8%
Australia20 March – 8 May491 392 billion1 320 billion-5%

* The United States did not enter an overall nationwide lockdown. Rather, each state had its own lockdown. Source: QuickBooks, Trading Economics.

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.