N.Z. in lock down: DAY 10


Yesterday was DAY 10 of New Zealand in lock down as we try to fight the COVID19 pandemic.

Over the last several days I have been starting to think about what faces New Zealand once the time comes With the number of days since lock down began, now in the double digits, and long since shorn of any novelty it might have acquired, Zealanders will be looking at potential scenario’s that the country might confront when restrictions are lifted:

  • SCENARIO A: Will we experience a second big wave of COVID19 at some point down the track;
  • SCENARIO B: Will there be a long period of gradual easing off around the country over say 12-18 months with COVID19 completely erased
  • SCENARIO C: Will it be like a medical variation of of an aftershock sequence with the aftershocks (new waves of COVID19)gradually diminishing

After about not later than mid-May, the Government is going to have to make some pretty tough choices, and not just economically, but socially as well. With the economy potentially going to retract by 30%, we are talking about something that will make the Global Financial Crisis, and possibly even the 1987 stock market crisis look pretty tame. The huge numbers of people likely to lose their jobs will be several hundred thousand – my guess is possibly 450,000-500,000 people made unemployed.

There will also be the social aspect. New Zealanders love their bars, restaurants, cafes; going to movie theatres, rugby matches, gigs and other fixtures. At some point this is going to have to restart just to offset the potential problems if you keep the country in lock down for too long. People are going to need to have serious face time with relatives, friends, colleagues – I had a phone call from my boss yesterday to see how things were going, and pass on some employment information. Whilst it was nice to have a phone call and a bit of a laugh at the circumstances, outside of my parents it was the first serious verbal conversation I had had in over a week.

Very briefly I want to touch on SCENARIO A and SCENARIO B before I go to what I think will be the most likely one. In A, we treat COVID19 like a cyclone where there is an eye in the centre which is relatively calm. We find that after a lull with relative calm and people wanting to have things eased off, New Zealand gets slammed by the other half of the cyclone. This is bad and much of the country goes back to LEVEL 4, causing more misery, job losses and another round of bubbles (not bubbly – though I am sure much of that will be drunk!).

SCENARIO B is the longest and the hardest, but in the end the most successful. New Zealand somehow manages to completely kill off COVID19 and we can get on with rebuilding the economy and going back to doing the things we love. BUT it comes at a cost. 2020 is a complete write off. The economy takes the full 30% hit and 500,000 people are out of work. Would New Zealand be prepared to wait until maybe December?

So, lets suppose for a few minutes, that today is some day in say July. The restrictions have been scaled back. Most things are open again, though many in restricted capacity – such as cinema’s having to run at half capacity whilst the movie of the year (whatever it might be)is screening because there needs to be an empty seat between every single person. The scenario in play is Scenario C – COVID19 is coming through in pulses, but they are getting weaker with time and not all of the country is being affected at once: Auckland may have a pulse one week and then it might be in Canterbury the next, before going to Nelson.

My estimate is that New Zealanders will comply as well as they have been probably until no later than mid-May. At that point the Government is probably going to have to dial back substantially to LEVEL 2 across most of the country and LEVEL 3 in hot spot areas. The problems faced by New Zealand after about mid-May will experience 3-dimensional growth – in numbers, in complexity and severity – if this does not happen.