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FEB. 18, 2022

Reopen for Business

Switzerland announced this week that most of the containing measures against COVID-19 are no longer in place as of February 17th, 2022. The Swiss easing of the pandemic measures is wider and quicker than the ones announced by other countries, but Switzerland is certainly not going alone in this direction. Other countries are starting to follow, given the lower aggressiveness of the Omicron variant and the pressures coming from some economic and social groups. What shall we expect from a world with fewer and fewer restrictions?

The first point to address is how the virus will circulate. Without measures like mandatory home office, capacity constraints at public venues, and COVID-certificates, people will get around more, and so will the virus. A research article published by Nature in November 2020 uses cell phone geolocation data to study the movement of people from “points of interest” such as restaurants, grocery stores, and religious establishments to residential areas to predict the spreading of the virus after a reopening. This article identified a group of points of interest accounting for the largest number of infections: namely, these are restaurants, gyms, hotels, cafes, and religious organizations. The article also highlights a higher rate of infections in low-income residential areas, as the points of interest in these areas tend to be more crowded. A reopening can lead to a higher number of infections in low-income groups.

Besides the social impact, we must take into account the economic effects of the reopening. To assess the economic impact, at least in the short- to medium-term of a reopening, one can look at the end of the first wave. At the beginning of the COVID outbreak, all countries closed almost simultaneously, while the reopening process was heterogeneous. The World Bank observed this heterogeneity to determine how the sequencing (i.e., what to reopen), the time, and the speed of reopenings affected the economic recovery. The aftermath of the first wave suggests that an easing from heavy to moderate restrictions is linked to a more significant increase in economic activity compared to the complete lift off of all restrictions. Regarding the timing of reopening, a reopening after the peak of the infection is a better choice when it comes to economic recovery. Regarding the speed of the reopenings, a slowly staged and transparent path to normality appears to be more effective in fostering economic activity.

Overall, it is interesting to see how different countries are approaching the issue. These findings can help policymakers outline the most efficient path towards reopening even though they do not consider several positive factors that were not present at the time of these studies, such as vaccines, better access to treatment, and widespread awareness of prevention measures.

We thank you for your continued support.

The FAM team