How long will all this last?
When will life get back to normal?
Will we be locked down further?
Is all this really necessary?
ANZ Bank recently released a research insight attempting to model the path of COVID-19 as they recognise that understanding the virus’ transmission pattern is integral to assessing the resultant economic damage.
According to the ANZ modelling, the shutdown of Lombardy in Italy should pay off.
They, therefore, concluded that it could be a case study for understanding how long economic activity needs to stay shuttered.
In general, the ANZ model suggests social distancing works, but such strategies will need to remain in place in much of the world until the end of April, and even longer in some countries.
Of course, they agree that the modelling is highly sensitive to the model parameters.
Here’s what the ANZ report said:
A simple model of case growth rates
One of those is the spread of the virus and the success of the lockdowns in bringing the pandemic under control so that a normalisation of economic activity can begin.
Here, we focus on that more closely.
We have modelled the path of COVID-19 across a number of economies, measuring the growth rate of confirmed new cases, in real time.
In a forecasting sense, we had to make assumptions about the impact social distancing would have on these transmission rates, and we acknowledge that this is both uncertain and sensitive.
But with few other tools, we hope this can provide some understanding of the duration of the supply shock to the global economy, and thus an estimate and way to monitor the economic damage.
What is the data telling us?
Having observed these models for a couple of weeks, we have noted a few insights.
With Italy, and Lombardy in particular, now a couple of weeks into lockdown (and a shift in the steepness of the curves now evident), we have a better understanding of the impact of lock-downs.
For both, the growth rate of confirmed new cases after two weeks of lockdown was about 85% of that seen prior to the lockdown.
This is similar to reports from China.
If we project that forward, it suggests the peak in the growth rate in Italy is behind us, and with stringent lockdowns in place until the end of April, the curve could flatten.
We will closely follow reports from Italy over the next week.
Indeed, the second day of decline in the rate of case growth is a glimmer of hope.
Extending this experience to other economies, where we assume the measures taken to date and voluntary distancing will have similar success, we estimate the following days until only 20 new cases are confirmed per day.
|Country||Days locked down till 20 new cases||Date of 20 new cases|
Source: ANZ Research
What the table shows is that early containment can have a dramatic impact on how quickly lockdown measures can be lifted.
In Australia, for example, the model suggests that a month of disruption may be sufficient.
Though a degree of vigilance will need to remain after this date to ensure that there are no second waves.
The attached spreadsheet shows the numbers of infections for several countries, as well as the path that confirmed new cases may follow if the historic trends we have outlined above are any guide.
You will see that there are fields where you can make your own assumptions and generate your own curve for any specific economy.
We hope that this will help everyone in understanding the potential economic impact of this health crisis.
There are some caveats around these numbers.
In particular, case counts can only rise as fast as testing allows, so countries with less testing may appear more benign that they actually are, and curves will be underestimated.
However, they will at least set a baseline and confirm our view that to properly manage the pandemic we should be expecting extreme disruption to last well past Easter.
China and Singapore have recently experienced the arrival of new cases as people return home from overseas.
This, on top of the staggered nature of the dates where countries manage to bring daily case rates under control (as highlighted above) will mean that it’s likely that travel bans and stringent border controls will be in place long past the easing of domestic containment.
And this will mean that the recovery from the shock will also be relatively tepid, and quite extended.
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