Federal finance memo says lifting lockdowns, restrictions not a sure path to economic recovery

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Government officials believed in late summer that an economic recovery would not magically follow if lockdowns and public health restrictions were lifted, according to a recently obtained federal document.
The internal briefing notes that a key to recovery is the level of confidence people have in their government’s ability to contain the spread of COVID-19.

The Canadian Press used the Access to Information Act to obtain the Department of Finance briefing note, prepared in early September.

While restrictions and lockdowns are common ways to reduce transmission of the novel coronavirus, the memo also outlines other options, including increased testing and contact tracing.

He says countries that have been successful in reducing transmission of the virus to very low levels have seen more people visit retailers, use transit and go to workplaces.

Countries that have not kept COVID-19 under control, including those where restrictions have been loose or non-existent, “have experienced a much more uneven recovery,” the briefing said.

“Lifting restrictions is not enough for a full economic recovery,” the note said, adding that “evidence has shown that to unlock demand, it is essential that individuals also feel secure and confident in the ability of their government to contain the virus. ”

A “patchwork” approach

The words of the briefing paper echo much of what the government heard over the fall – and more recently, after the Liberals pledged to spend up to $ 100 billion if needed to an economic recovery plan.

“Restoring public confidence in the economy requires systematic, widespread and rapid testing and contact tracing – which we have been calling for since the spring,” said Robert Asselin, senior vice president of policy at the Canadian Council of business.

“Nine months after the start of this crisis, it is still not in place in most of the country. The disparate approach to testing and tracing has been inefficient and very costly from a health and economic standpoint. ”

By year’s end, Canada had recovered just over four-fifths of the three million jobs lost in the spring, and real gross domestic product was about four percent below pre-pandemic levels after have recorded a historic decline in the second quarter.

Low levels of COVID-19 transmission contributed to this rebound, suggesting that “Canada has managed to balance the health and economic risks associated with the pandemic relatively well,” the briefing said.

“Nonetheless, the experience of other countries that have witnessed a resurgence or a second wave of infection suggests that health risks will remain a threat as we move into the fall and beyond. the road to economic recovery. ”

New hope for 2021

The Canadian economy has grown even as the number of cases has increased, offering what experts see as a beacon of hope for 2021 despite the imposition of new restrictions in parts of the country.

The restrictions have hit some sectors harder than others. The briefing note foreshadowed how provinces and municipalities may have to more easily close or limit the hours of operation of certain businesses, such as restaurants and bars, “and will need to be equipped to quickly identify and trace outbreaks.”

The briefing note also states that effective contact tracing “goes hand in hand” with testing to reduce transmission. By the time the briefing note was written, testing had affected about 48,000 people per day in Canada, or about 0.13% of the population, by the end of August.

“Evidence varies on the appropriate level of testing, but increased capacity and more quickly available testing would be a big boost to economic recovery in the fall,” officials wrote.

Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said the country needs to start using faster tests to get ahead of COVID-19 as officials scramble to deploy vaccines.

“By knowing who has been recently exposed to the virus, in many cases even when people are infected but asymptomatic, we can contain its spread through precisely targeted responses,” he said.

“This approach will limit the need for comprehensive response measures like lockdowns, which cause serious collateral damage. ”

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