Business shutdowns amid the coronavirus pandemic imposed an economic cost, but removing restrictions is no guarantee of a quick recovery unless the virus is defeated, the IMF said Thursday.
Voluntary social distancing played nearly as large a role in the economic impact of Covid-19 as the forced restrictions, the IMF said in its World Economic Outlook (WEO) chapter on lockdown effects.
Using mobility data from Google and Vodafone, the report found that voluntary social distancing made an "important contribution" to the recession, which "should caution against expecting a quick economic rebound once lockdowns are lifted."
"This is especially relevant for countries that lift lockdowns prematurely, when infections are still relatively high," the IMF said.
Despite the short-term economic costs, lockdowns may lead to a faster economic recovery by containing the virus and reducing voluntary social distancing, according to the research.
But the IMF rejected the debate as a simple tradeoff between lives and livelihoods, since rising infection rates hit the economy as well, making people less willing to venture out.
"By bringing infections under control, lockdowns may thus pave the way to a faster economic recovery as people feel more comfortable about resuming normal activities," the report said.
The Washington-based crisis lender in June projected a nearly five percent global recession this year, but IMF chief Kristalina Georgieva this week said new data show the situation is "less dire" although certainly not rosy.
The IMF is due to release the updated WEO forecasts on Tuesday.
The report showed strict lockdowns early in the pandemic were more effective in containing the spread of the illness, and could be lifted sooner, compared to restrictions imposed after the case level had risen.
But the authors caution that "as long as significant health risks persist, economic activity is likely to remain subdued."
They repeated Georgieva's call for officials to resist the impulse to withdraw policy support too quickly and instead should "preserve spending on social safety nets."
That said, governments should implement measures that support economic activity while continuing social distancing, including work-from-home programs.