OECD projections suggest little upside from zero-covid approach

An enduring feature of the debate around anti-virus restrictions in Ireland over the past year, in particular, was comparisons between the economic impact of the regime here and the hit in so-called zero-covid countries such as Australia and New Zealand.

The zero-covid strategy involves eliminating the virus through draconian lockdowns and keeping it out by sealing borders. Ireland’s looser strategy sought to minimise the virus without going full elimination.

The scientists promoting zero covid in Ireland have for 12 months loudly suggested it would be better for the economy, despite little evidence apart from one set of economic projections that appeared in the medical journal The Lancet.

Global economic growth projections this week from the Organisation for Economic Co-operation and Development (OECD) should put to bed the notion that zero-covid countries reaped any major economic dividend from their tough approach.

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Irish gross domestic product (GDP) is skewed by multinationals, but it is still a decent indicator of the trajectory of economic performance. The OECD, which says Ireland’s domestic economy is poised to rebound strongly, predicts GDP growth this year for Ireland of 4.2 per cent, compared to 3.5 per cent in New Zealand, poster child of the zero-covid campaign, and 5.1 per cent in Australia.

Much of the growth in New Zealand and Australia is due to frothy domestic demand fuelled by booming housing markets. A similar phenomenon didn’t end well for Ireland just over a decade ago.

For 2022, the OECD pegs growth of 5.1 per cent for Ireland, higher than the 3.8 per cent it predicts for New Zealand, and 3.4 per cent in Australia. In 2020, Ireland was the only European Union country to grow, up 3.4 per cent, while New Zealand shrank by 2.9 per cent and Australia by 1.1 per cent.

Ireland is contemplating reopening to much of the world, while New Zealand and Australia seem to have no idea how or when they will reopen borders, which brings with it significant economic downside risk.

The flip side, of course, is that while Ireland’s economy did not reap any extra damage from eschewing the zero-covid approach, it had a huge human cost. Deaths in Australia and New Zealand were just a fraction of here.