What an awful month it’s been so far. For the first time in 12 months, the Gold Coast airport had no flights one day earlier this week, as reported by the Courier-Mail. Businesses across the country are pleading for help. Restaurants are closing for good because of one lockdown too many, and shops on high streets are in trouble. It was all foreseeable in an economy without JobKeeper and with state governments committed to lockdowns as means of eliminating COVID-19 community transmission (e.g. see my April post More action, less talk needed on vaccines). Lockdowns are costing jobs (see the ABS payrolls jobs estimates) and reducing business confidence across the country, most noticeable in NSW.* Surely confidence will have fallen again from July, the latest data point in the chart below, to August.
Not only has the Queensland economy been buffeted by our own lockdowns, but by the indirect impacts from lockdowns in other states, through reductions in interstate travel and trade. Among the Australian states, the indirect linkages are probably the strongest with NSW. The scatterplot below shows a reasonable positive correlation between quarterly percentage growth rates in state final demand in Queensland and NSW (with a correlation coefficient of 0.47).
There are also important linkages with Victoria’s economy, although the strength of correlation is slightly lower (with a correlation coefficient of 0.43).
Queensland will likely experience adverse indirect economic impacts from ongoing NSW and Victorian lockdowns over the next couple of months at least. Thankfully Queensland cities are not locked down at the moment and that means our economic prospects are better than NSW’s and Victoria’s. Of course, that could change if it turns out the Indooroopilly cluster wasn’t fully contained, or if an infected person comes in to Queensland from NSW.
*Of course, the no-lockdown counterfactual would involve adverse economic impacts, as people would stay away from cafes and restaurants if COVID-19 infections were growing quickly, but I suspect an increasing number of Australians are starting to question whether lockdowns deliver net benefits.
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