TLDR & TLDL: It’s becoming clearer by the day that the Delta variant of Covid-19, which is 1,000 more transmissible and much deadlier for the unvaccinated than earlier variants, will shut down ‘normal’ travel to the rest of the world until well into 2023, if not longer.
The Government suspended the trans-Tasman bubble for eight weeks on Friday, but a resumption of quarantine-free travel between Australia and New Zealand now seems very unlikely this year. Sydney’s outbreak remains uncontained with 141 new cases recorded yesterday, including 38 cases who were out in the community spreading it while infectious. The way Sydneysiders are observing the ‘lockdown’ is loose to say the least.
The Australian reported this morning that New South Wales’ Cabinet is considering extending its lockdown until September 17 at the earliest. New cases were also recorded in Victoria and South Australia, but the outbreaks seem much more contained there.
However, the Delta variant has clearly shifted the Government’s level of caution around re-opening the bubble, given anyone with Delta transmits 1,000 times the viral load while infectious.
"Certainly when it came to the trans-Tasman travel bubble when we looked at the situation and said, 'how do we manage where we’ve got NSW with this outbreak', and the reality is we needed to take a step back and say the whole of Australia is now potentially at risk of the Delta variant spreading, it is so much more transmissible. We therefore had to act.” Grant Robertson on TVNZ’s Q+A.
Delta is also causing all sorts of grief in Europe and the United States. Germany is considering reimposing restrictions and infection rates have surged in Republican-run states where vaccination rates are low. Vaccination rates are also painfully low in the likes of India, the Philippines and China.
Hopes for a rip-roaring global economic recovery through the second half of 2021 have now gone. That may also force the Reserve Bank to reconsider the three rate hikes penciled in for them by local economists in 2021, and the four more in 2022, which would push mortgage rates closer to 5%.
Keep an eye on the US Federal Reserve’s Open Markets Committee meeting due to end on Thursday morning our time. Currently, the Fed is expected to leave rates on hold until 2023 and keep printing US$120b/month. Our central bank will not want to get too far ahead of the rest of the world and will also point out New Zealand’s okay inflation rate will never get too far away from the rest of the world’s. Also remember that Australia is now expected to have a recession in the second half of this year.
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Ka kite ano
Bernard
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