New Zealand loosens pandemic restrictions amid soaring cases

The prime minister, Jacinta Ardern, has announced the loosening of coronavirus restrictions from February 16th, with New Zealand moving from Phase 1 to Phase 2 of its response to the emergence of the Omicron variant.

Why does it matter?

The shift demonstrates the major change in strategy that the government has pursued since it became impossible to keep the Delta variant of the coronavirus at bay—a challenge that has been exacerbated by the arrival of an even more transmissible strain. The move through the phases means that those who test positive for the coronavirus will have to isolate for 10 days rather than 14, and those deemed to be close contacts will see their isolation period cut from 10 days to seven. Under Phase 3, which would be adopted if daily cases reach well into the thousands, the isolation periods would remain the same but the definition of a contact would become more specific and refer only to those in the same household.

This is the opposite approach to that taken by the government when it was seeking the elimination of the virus. Where cases had previously risen, restrictions were tightened. Now, the government is accepting that cases of the Omicron variant will spread widely and, given the high levels of vaccination, that minimising the inconvenience to the economy and the everyday lives of New Zealanders needs to be prioritised. The number of new cases reached an all-time high of 981 on February 14th. The government expects the figure to continue to rise steeply in the coming weeks.

Meanwhile, a legal protest outside the parliament building in the capital, Wellington, against the government’s vaccine mandate and other restrictions entered its second week in mid‑February. So far, the government and the police have opted to let the protesters remain in the grounds of parliament, noting both their right to be there under local law and the risk of escalating the dispute if they were encouraged to move on.

EIU does not believe the protest represents a major risk to political stability. The vast majority of New Zealanders support mask and vaccine mandates and sympathy for the protesters would evaporate if they were to become more disruptive. That said, the emergence of other anti-restriction movements, such as that in Canada, and the ease of mutual support through social media mean the protest could last weeks or months, rather than days.

What next?

We believe that the government and law enforcement will continue to respect the right to protest, while the surge in cases of the Omicron variant is likely to result in a moderate softening of business and consumer confidence; this is already incorporated into our economic forecast.