Economic Impact Of Non-Pharmaceutical Interventions During COVID-19

Last Updated: December 4, 2020

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This Briefing Note was completed by the Evidence Synthesis Unit (Research, Analysis and Evaluation Branch, Ministry of Health) based on information provided by members of the COVID-19 Evidence Synthesis Network. Please refer to the Methods section for further information.

Purpose

This note summarizes scientific evidence and jurisdictional experiences on the economic impacts of non-pharmaceutical interventions (NPIs) (lockdown Interventions, micro/targeted interventions, or no intervention) implemented for COVID-19 across Canadian and international jurisdictions.

*The full version of the Briefing Note including the Appendix can be accessed in the PDF file at the top of the page*

Key Findings

Modelling studies provide estimates on the economic trade-offs associated with implementing approaches at various levels of intervention or policy stringency. The following study findings describe the economic impacts of NPIs:

Analysis for Ontario

Similar to Ontario, many countries have divided their nations into regions, and subregions to implement a range of lockdown strategies (e.g., mandatory proof of negative COVID-19 test before entering a region, closures and limits to mass gatherings, and self-isolation mandates). Many Ontario public health units implemented strategies to enforce and supplement the provincial COVID-19 response framework. No economic impacts were identified.

Supporting Evidence

This section below summarizes scientific evidence and jurisdictional experiences on the economic impact of NPIs implemented during the COVID-19 pandemic across Canadian and international jurisdictions (lockdown Interventions, micro/targeted interventions, or no intervention).

Scientific Evidence

  • While no systematic reviews were identified, numerous modelling studies provide estimates on the economic impacts of COVID-19 NPIs. Many of these studies analyze tradeoffs with stronger or weaker levels of intervention stringency. Definitions of stringency levels vary across studies; however, several refer to the Oxford Response Stringency Index, which collects publicly available information on 18 indicators of government responses. The following studies describe the economic impacts of NPIs:
    • Lockdown Interventions: A study on the economic impact of COVID-19 in the US estimated that in terms of the trade-off between compliance with NPIs and duration of lockdown, the best outcome is reached when the lockdown is for 30 days and the public compliance with physical distancing measures is at least 80%. One modelling study in British Columbia concludes that the optimal policy is to adopt an initial lockdown level that reduces the reproduction number of the epidemic to close to one, which is then reduced once a vaccination program is underway. This model also indicates that an oscillating policy of strict and mild shutdowns is less effective than a policy that maintains a moderate shutdown level. Another model (Brazil) demonstrated that governments that chose to preserve the economy by using less severe isolation policies, fatally reached a situation with a high cost in human lives, and still suffered economic losses. There are macro/microeconomic outcomes that are reported to arise from lockdown interventions:
      • Macroeconomic Outcomes: A study (New York, US) forecasted the effect of the COVID-19 outbreak on the economic output and predicts annualized quarterly growth rate of real gross domestic product (GDP) to be between -3.99 to -4.299% for the first quarter and between -19.79 to -21.67% for the second quarter of 2020. One study reported that the Australian Treasury estimates that the lockdown cost Australia more than CAD $1.14 billion per week. One modelling study (China) estimates the total monthly economic losses in China during the lockdown reached CAD $60 billion. Macroeconomic indicators comparing New Zealand, Greece, Iceland, and Singapore find that the GDP of Iceland and Greece have shown the largest contraction due to the COVID-19 pandemic, with a decrease of approximately 10% in 2020-Q1 compared to 2019-Q4. A modelling study calibrated to the world economy with data from 44 countries estimated that world output fell by 7% at the early stage of the crisis, when only China was under lockdown, and by 23% at the peak of the crisis, when many countries were under a lockdown. This study notes that recovery time is likely to be significantly greater if partial lockdowns persist. A study concluded that government announcements regarding public awareness programs, testing and quarantining policies, and income support packages largely result in positive market returns.
      • Microeconomic Outcomes: A study (Switzerland) estimates that 31% of jobs have been restricted by the lockdown policy, with the strongest effects in large industries such as hospitality, construction, and arts and entertainment, and among low- and middle-income individuals compared to high-income individuals. A study in Vietnam indicates that 61.6% of respondents reported decreases in their incomes and 28.2% reported that their income deficit was 40% and above.
  • Micro/Targeted Interventions: A modelling study in Italy reports that the geographical impact of the disease and socio-economic factors led to uneven regional economic losses and suggests geographically tailor-made policy actions instead of a ‘one-rule-fits-all’ approach to mobility restrictions. Another modelling study (US) comparing 17 strategies, including a vaccine (i.e., targeted antiviral prophylaxis [TAP]), found the full TAP is the most effective single strategy, reducing the number of cases by 54% at the lowest cost to society (CAD $152 per capita). Pre-vaccination (i.e., with a low-efficacy vaccine) reduces number of cases by 48% and is the second least costly alternative (CAD $168 per capita). Adding school closures to full TAP or pre-vaccination further improves health outcomes but increases total costs to society by approximately CAD $3,240 per capita.
    • Travel Restrictions: A comparison of Sweden with Denmark, Finland, Norway, and New Zealand finds that early imposition of international travel restrictions combined with high levels of government-mandated stringency of physical distancing reduced the per capita cases and per capita fatalities associated with COVID-19. In Nordic countries, less stringent government-mandated physical distancing is not associated with higher quality economic growth.
  • No Intervention: In the absence of interventions (i.e., vaccine or school closure), a study (US) on influenza predicts a 50% attack rate with an economic impact of CAD $224 per capita as loss to society.
  • A cost-effectiveness study comparing Denmark and Sweden suggests that public health interventions for COVID-19 should account for life years saved and not only lost lives. The evidence suggests that strict lockdown costs more than CAD $156,000 per life year saved.

International Scan

  • Lockdown Interventions: Many countries have divided their nations into regions, and subregions for the implementation of a range of lockdown strategies. Some common interventions seen were mandatory proof of negative COVID-19 test immediately before entering a region, closures and limits to mass gatherings, and self-isolation mandates. Some regions had government involvement in managing or monitored quarantines by providing quarantine facilities or large fines for breaking quarantine mandates (e.g., Taiwan). Internationally, two approaches to lockdowns emerged:
    • Strict lockdowns are implemented until cases are reduced to, or near, zero, and lifting restrictions with a low threshold to trigger future measures as needed. For example, some public health measures were implemented in Taiwan as soon as cases were beginning to be identified on social media in China, and South Korea recently re-implemented some public health restriction strategies with just 24 cases per day.
    • Restrictions are progressively increased as case counts, death counts, and/or hospital utilization increase (e.g., a three-tier alert system localized by postal code in England), and ongoing strategies already in place are extended (e.g., Germany, Netherlands).
    • Within these two general types of approaches taken by jurisdictions, there were differences in the specifics of the individual lockdown plans. Italy ‘red’ zones require online learning for high school and older students, France limits outdoor exercise to three hours, and there was media coverage that Slovakia conducted mandatory mass testing or mandatory strict limits on citizens on October 23-25, 2020 where individuals were not allowed to work unless they had proof of a negative test result or self-isolated for 10 days.
      • Economic Outcomes: An International Monetary Fund (IMF) (October 2020) report analyzed the economic activity of 52 countries finding that despite short-term economic costs, lockdowns may lead to a faster recovery by containing the spread of COVID-19 and reducing the need for voluntary physical distancing, possibly having positive overall effects on the economy. Another IMF report (August 2020) with data from 62 countries notes that workplace closures, stay-at-home orders, and cancellations of events are more effective in flattening COVID-19-related infections but are the costliest in terms of their impact on economic activity. Less costly containment measures, such as international travel restrictions, are nonetheless successful in reducing COVID-19 infections.
        • An analysis of the health-economy trade-off of 38 countries found that countries that suffered the most severe economic downturns (i.e., Peru, Spain, the United Kingdom) are generally among the countries with the highest COVID-19 death rates. Further, countries where the economic impacts have been modest (e.g., Taiwan, South Korea, Lithuania) have kept the death rates low. The economies of the US, Sweden, Denmark and Poland contracted by approximately 8-9%, but the death rates are markedly different: the US and Sweden have recorded five to 10 times more deaths per million than are reported by Denmark and Poland.
        • An OECD report found that the initial direct impact of the shutdowns could be a decline in the level of output of between one-fifth to one-quarter in many economies, with consumers’ expenditure potentially dropping by around one-third. The impact of the shutdowns will weaken short-term growth prospects substantially. The scale of the estimated decline in the level of output is equivalent to a decline in annual GDP growth of up to two percentage points for each month that strict containment measures continue. If the shutdown continued for three months, with no offsetting factors, annual GDP growth could be between four to six percentage points lower than it otherwise might have been.
        • According to the World Bank in a report on Asia and the Pacific, lockdown interventions have resulted in most countries experiencing lower levels of GDP, rising unemployment, higher levels of impoverishment, and increasing income inequality. Some countries are more vulnerable to the economic challenges resulting from COVID-19, including those implementing more stringent lockdowns and those that are more globally integrated due to their dependence on trade, tourism, and remittances.
        • A World Bank report on Europe and Central Asia found that NPIs led to approximately a 10% decline in economic activity across the region. On average, countries that implemented NPIs in the early stages of the pandemic appear to have better short-term economic outcomes and lower cumulative mortality, compared with countries that imposed NPIs during the later stages of the pandemic.
        • A US report that evaluated the effects of economic policies and economic measures identified: 1) microeconomic outcomes include declines in daily credit card spending from mid-March to -30% year-over-year growth rate at the end of March, and has since recovered to slightly above zero percent growth in June 2020. After shelter-in-place orders became widespread in mid-March, the number of employees working fell from about 15 percent below normal conditions to about 55 to 60 percent below normal conditions; and 2) macroeconomic outcomes include OECD estimates that the COVID-19 pandemic and containment measures will decrease US real GDP by 7.3% in 2020 in the absence of a second wave in the fall, or 8.5% if such a wave does occur.
  • Micro/Targeted Interventions: Some jurisdictions have implemented micro/targeted interventions: For example, as of November 30, 2020, South Korea is in their third wave of COVID-19 spread through the Seoul metropolitan area with approximately 24 new cases per day. As a result, they have enacted enhanced quarantine measures and increasing distancing to 1.5 – 2 metres from previous, and these measures are to be evaluated within a week to determine if lockdowns should be nationwide. In Scotland, alert levels were created by postal code; the most restrictive (level 4) requires not meeting others in the home but meeting up to six individuals in a public place (not including children under 12) is allowed. Restaurants and pubs are closed, and tourism accommodations are for essential customers only. Travel is restricted so those in level 3 or 4 local authorities do not travel to areas with lower restrictions.
    • School Closures: Information from the OECD on school closures was also identified. There are two implications related to long-term economic costs of school closures in OECD countries: 1) affected students whose schooling has been interrupted by the pandemic face long-term losses in income; and 2) national economies that go forward with a less skilled labour force face lower economic growth which subtracts from the overall welfare of society.

No Intervention: No information identified.

Canadian Scan

  • Lockdown Interventions: During the initial lockdown intervention during the first quarter of 2020, Statistics Canada reported that small firms were among the hardest hit by the COVID-19 pandemic.
  • Micro/Targeted Interventions: A report from Ontario Health (Quality) noted that provinces and territories across Canada implemented public health strategies at a provincial level and then additionally by regions that were deemed high risk based on particular indicators (e.g., case counts, hospitalizations and deaths) and required additional measures. A summary of common themes across public health strategies implemented by Canadian jurisdictions includes:
    • Regional Travel Restrictions: Manitoba and Quebec restrict travel to and from other regions of the province. For example, measures taken in the Northwest Territories include:
    • Visitor Restrictions to Long-Term Care Homes: Nunavut and Saskatchewan have restricted visitors to long-term care homes.
    • Extension on School Breaks Before or After Christmas Break: Alberta and Manitoba have extended online learning for middle/high school children (grades seven-12).
    • Travel Restrictions: The Atlantic ‘bubble’ in the eastern Canadian provinces allowed travel within but not beyond provinces within the bubble. Recently, as of November 24, 2020 in Prince Edward Island and November 25, 2020 in Newfoundland and Labrador, with growing case counts, there has been a pause to this bubble as provinces have made the choice to lockdown and implement stricter quarantine measures.
      • The following measures were taken in British Columbia (details of measures taken by other provinces and territories can be found in the Appendix, Table 5):
  • No intervention: No information identified.

Ontario Scan

  • Lockdown Interventions: No information identified.
  • Micro/Targeted Interventions: Ontario public health units implemented strategies to enforce and supplement the provincial COVID-19 response framework. Ontario public health units created class-order measures as additions to the measures mandated by the provincial COVID-19 response framework including:
    • Mandating close contacts of positive cases isolated, even if they themselves test negative;
    • Keeping a log of every individual who enters an establishment (e.g., restaurant); and
    • Hand sanitizer be made available at entrances to establishments.
  • No Intervention: No information identified.

Methods

Individual peer-reviewed articles and review articles were identified through PubMed, the Cochrane Library, and Google Scholar. Grey literature was identified through Google and relevant government websites. The search was limited to English sources and therefore may not capture the full extent of initiatives in non-English speaking countries. Full-text results extracted were limited to those available through Open Access or studies made available to the Ministry by our partners.

  • The COVID-19 Evidence Synthesis Network is comprised of groups specializing in evidence synthesis and knowledge translation. The group has committed to provide their expertise to provide high-quality, relevant, and timely synthesized research evidence about COVID-19 to inform decision makers as the pandemic continues. The following members of the Network provided evidence synthesis products that were used to develop this Evidence Synthesis Briefing Note:
    • Ontario Health (Quality). Public Health Interventions Targeting the Management of Spread of COVID-19: A Jurisdictional Scan. December 4, 2020
    • Evidence Synthesis Unit, Research Analysis and Evaluation Branch, Ministry of Health. December 4, 2020.

For more information, please contact the Research, Analysis and Evaluation Branch (RAEB), Ministry of Health.