Coronavirus: Social distancing taking high toll of NZ economy, but few alternatives - economist Shamubeel Eaqub

Although the economic fallout from COVID-19 is "without a doubt" bigger than that of the Global Financial Crisis, there is little alternative right now to essentially letting the economy grind to a halt, an expert says.

Economist Shamubeel Eaqub says the impact that social distancing is having on the economy is massive, but it is just a fraction of what a fully fledged outbreak would cost the country.

"With each passing day we're seeing how bad it's going to get," Eaqub told The Am Show on Thursday.

"If we're not going out, if we're not eating out, if we're not being able to get to work - and most jobs can't be done away from their workplaces -  that just means that we have to have less economic activity. But we need to have this because the alternative is countless thousands of people die."

Worldwide, there have been more than 8200 deaths due to COVID-19, with more than 200,000 people confirmed to have been infected with the virus. 

After originating in China, the epicentre of the virus has shifted to Europe, with Italy the hardest-hit country.

In New Zealand, 20 cases have been confirmed as of Thursday morning, though health officials are bracing for that number to rise as testing ramps up. 

Although schools remain open, many companies are moving to have people work from home if possible.

Over the weekend, the Government announced that everyone coming into the country as of 1am on Monday - with the exception of people arriving from the Pacific Islands - would have to self-isolate for 14 days, with Prime Minister Jacinda Ardern on Wednesday urging even people who arrived before the deadline to also go into isolation. 

The move to essentially shut our borders has had a devastating impact on the tourism industry, and countless other industries are reporting a drop in income as both a direct and indirect cause of the pandemic. 

Exporters have also felt the brunt as COVID-19 causes chaos for global supply chains.

Earlier this week, the Government announced a $12.1 billion economic package to support struggling businesses. More than half of the funding went towards wage subsidies for affected businesses, while there was also a cash injection for the health sector, an aviation support package and an increase in benefits, among other things. 

Despite the economic downturn, Eaqub said the Government has the tools to deal with the situation, but it won't come easy.

"This is why we should be using fiscal policy, we should be using monetary policy - what we've seen in recent weeks from our Government and other governments around the world is just the beginning. 

"We're going to see a hell of a lot more stimulus coming over the coming months."

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