New COVID Strains a Threat to the Economy

The plan for Australia’s economic recovery seems clear being to contain any virus outbreaks until the majority of the population is vaccinated, the most vulnerable are protected and herd immunity is reached.  The risk to this aim is an escape of the virus from hotel quarantine into the community necessitating a hard lockdown to contain its spread.

The new UK (or South African) variants present a significant threat because they are estimated to be 70% more contagious than the original strain.  From the obtuse ways “contagiousness” is calculated, scientifically this means the “R” or reproductive number for the new strains are roughly twice as large as the original strain[1].  The importance of this issue is that lockdown and contact tracing measures that may have worked against an outbreak of the original virus reducing the “R” number below 1 so the clusters are contained and die out, may not be sufficient against the new variants.

If this is the case, it would likely necessitate harder lockdowns than the recent one in NSW regarding the Northern Beaches outbreak and probably more along the lines of the ones in the UK where new cases appear to be falling although deaths are still rising. The risk posed by the new virus is exemplified by the Queensland Government’s reaction to a potential (not even confirmed) outbreak of the new strain earlier this year when a hotel cleaner became infected.

The risk of the next outbreak being of the more virulent UK (or South African strain) is far greater for two reasons: It is progressively becoming the dominant strain as it spreads more quickly than the original strain and it is more contagious and more likely to breach quarantine.

Offsetting this risk is the continuously improving quarantine procedures and the nearing roll out of the domestic vaccination program where the initial phase will include anyone who is likely to come into contact with those in the quarantine system. This will also probably extend to anyone in quarantine being vaccinated on arrival and in time vaccination before they are allowed to transit back to Australia.  The vaccine can also be used to mitigate outbreaks by pre-emptively vaccinating all close contacts of anyone infected and their close contacts too in an effort to have these high risk potential infectees achieve immunity before the virus takes hold.  Further as the vaccine is deployed across the population, the risk of spread of any outbreak lessens with more people acquiring immunity through vaccination.

Australia is now in somewhat of a race to roll out the vaccine to protect its population and achieve herd immunity before the next outbreak so hard lockdowns no longer need to be imposed to contain the spread.  Assuming Australia manages the situation well, economic risks to the economy should lessen throughout the year, but until mass vaccination is effected, the risk of the severe economic disruption via a hard lockdown in a region, capital city or state remains.


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