COVID-19 could cost the world $46 trillion, but rapidly lifting restrictions is a bad idea - study

The cost of coronavirus to the world economy could rise to as high as $46.2 trillion, according to a new study.

The research, published on Friday in scientific journal Nature Human Behaviour, modelled the economic impact of COVID-19 lockdowns around the world on global GDP.

Tsinghua University researchers found that a two-month 80 percent lockdown can slash global gross domestic product (GDP) by around US$20 trillion ($30.1 trillion).

Increasing the duration of an 80 percent lockdown from two to four months increases the global economic losses to US$22.7 trillion ($35 trillion) - and that jumps to US$30 trillion ($46.2 trillion) if the lockdown continues for six months.

The study focused on global supply chains - which it defines as "systems for the worldwide production and distribution of goods and services" - and found they increase as the number of countries imposing restrictions increase.

The research also suggests supply chains were affected more by the length of a lockdown than its severity.

"A longer containment that can eradicate the disease imposes a smaller loss than shorter ones," the study reads.

"If the pandemic were to reoccur, shorter and stricter lockdowns, which may depend on global coordination, could reduce losses by around 11 percent globally."

Study authors modelled three different scenarios for lifting restrictions, concluding that "a 'go-slow' approach to lifting restrictions may reduce overall damages if it avoids the need for further lockdowns".

That's good news for New Zealand, which acted early by imposing strict lockdown measures in March. The Government has since been criticised for de-escalating its restrictions too slowly, a move that critics say is doing unnecessary damage to our economy.

And the research shows mimicking us could be the best approach for other countries, including the US.

"In the United States, forecast losses from lifting the restrictions slowly over 12 months were 24.6 percent to 54.8 percent less than if restrictions were lifted quickly and had to be reintroduced," the study reads.

However the study found that regardless of what strategy is employed, it's impossible for losses not to be magnified beyond the direct effects of COVID-19.

"Pandemic control is a public good that requires collective efforts and support to lower-capacity countries," it concludes.