Cost Analysis of COVID-19 in Australia

Access to accurate and reliable information on the cost of COVID-19 is essential for informed socio-economic policy decisions. This paper analyses the economic costs associated with the COVID-19/SARS-CoV-2 pandemic, with a particular focus on Australia. This study examined both the macroeconomic costs measured as the foregone gross domestic product attributable to the pandemic and the direct and indirect costs to society. Using a bottom-up costing approach and the WHO-CHOICE model, this study estimates the direct and indirect economic impacts of COVID-19 on the Australian economy. The analysis draws on quarterly and fortnightly data from 2020 to 2022, the period during which the pandemic exerted its most severe economic effects. The results indicate that the per-day inpatient unit cost is estimated at AUD 836, representing the minimum benchmark for direct health costs. The WHO-CHOICE model identifies key determinants of inpatient hospital costs, including hospital bed occupancy, GDP per capita, and hospital admissions, which are found to be highly responsive to changes in inpatient costs. In terms of indirect effects, GDP fell by 1.9 percent below its projected no-COVID level in the first quarter of 2021. Based on these empirical findings, this study proposes several important policy recommendations to enhance economic resilience and healthcare preparedness in future public health crises.