New data inputs

Analysts, traders and fund managers are used to financial modelling but are now, in effect, expected to base outlooks on epidemiological outcomes.

DAVISON What are analysts using as base and outlier cases for things such as contagion peaks and timelines for relaxing social distancing measures – and thus resuming normal economic activity?

ZOLLNER We are all amateur epidemiologists nowadays! The uncertainty that abounds is ridiculous. There is a lot of demand, within the bank and outside, for numbers people can work with, even though everyone knows they will be based on particularly uncertain assumptions.

For what it is worth, we think New Zealand will not be able to eradicate COVID-19, simply because there are asymptomatic cases. But we may have got on top of it earlier than other countries. Even so, our prime minister is warning us that we will have thousands of cases and that we are at least two weeks away from the peak – we have to be realistic about that.

Our base case is that we have a four-week lockdown that proves sufficient. I think this is optimistic, but if it proves correct, it should get us back down to level-three lockdown – where schools are reopened and people can go back to work but are still encouraged to work from home if they can.

From there, we get back to level two – but always with the possibility of racing back to level four. We will manage the virus in waves until there is a vaccine. That is the circuit-breaker because herd immunity, if we are successful in flattening the curve, is years off.

GORDON I would suggest people do two things: listen to Bill Gates’ TED connect from last week and read the article The Hammer and the Dance. I am much more optimistic because this is an exponential function. If people go home for perhaps six weeks and we thus get to flattening the curve early enough, it is almost like eradication. We have to get absolute control of it but that is possible.

New Zealand is in a far better position than the rest of the world. It is going to take a long time for the world to recover from this.

ZOLLNER I agree. I do not think there is any other place in the world I would rather be than New Zealand. Our borders are not porous and we got into lockdown early.