Because the world has had no experience of handling a major epidemic for a century, there has been a far from uniform response across the globe. Diverse public health and economic management strategies allow us learn how best to handle the epidemic and to manage the economic fallout.

In Europe, Sweden pursued a different course to its neighbours in terms of its public health regulations, with limited mandatory closures. The result has been a greater spread of the disease than in neighbouring Scandinavian countries.

However, while Sweden did not lock down its economy, it has not avoided a major recession. The OECD forecasts that GDP will fall this year by almost 7 per cent in Sweden compared with 6 per cent in Denmark and 7 per cent in Germany. Clearly, across the OECD area, the behaviour of consumers is driven at least as much by fears about the spread of the epidemic as by mandatory closures.

This has important lessons for governments in planning an exit from lockdown.

There are now major pressures from businesses that are hurting badly, such as aviation, to reopen more rapidly. However, even if there were no restrictions, people will be very cautious about returning to air travel. Thus, whatever governments do, consumers’ tourism expenditure will not return to normal this year.

This highlights the continuing importance of prudent public health measures in facilitating an economic recovery. If governments ease up too early, it could bring on a second wave of infection, something that would greatly prolong the crisis and, therefore, the cost for business.

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Top priority

Wise business leaders understand that preventing a second wave of infections is a top priority for everyone.



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