Former finance minister Steven Joyce says it is a "pie in the sky" fantasy to suggest New Zealand can eliminate Covid-19 and remaining in lockdown would cause "massive" economic damage.

New Zealand and the world were almost certain to be hit with more waves of coronavirus outbreaks and so staying in lockdown would cause irreparable financial damage to many Kiwi businesses, Joyce said.

Most Kiwis were underplaying the economic hit that was coming and would only later fully understand later how bad it will be, he said.

"This whole idea that we would get rid of Covid-19 is fairly pie in the sky," he told the Leighton Smith Podcast.

"It is with the world, and it is with us and it will be how we manage it over the next 12 to 18 months."

His comments come as it looks increasingly likely New Zealand will exit its alert level 4 lockdown next Thursday and go into a level 3 phase.

The alert level 4 lockdown led to many - if not most - businesses closing their workplaces completely or getting by on very limited economic activity.

Yet what lies in store for alert level 3 still remains unclear as the Government thrashes out more details about which businesses can operate and to what extend.

Joyce said he was not making an argument against the initial lockdown.

Before that point, New Zealand had not done many coronavirus tests.

"So one of the reasons we went into lockdown frankly would've been not knowing what was going on," he said.

• Covid19.govt.nz: The Government's official Covid-19 advisory website

Now that more tests were being done and cases dropping, he said it was highly likely the lockdown would end next Thursday as planned.

He also rejected claims New Zealand should stay in a hard, alert level 4 lockdown to ensure that - after investing so much effort into eliminating the coronavirus - it stayed the course.

Anybody who thought the virus could be eliminated was "too ambitious", he said.

"Therefore, if you say to yourself it is not going to be possible to completely eliminate it or that it is unlikely to be possible to completely eliminate it in New Zealand, then what should you do instead?"

"Because the economic impact of what we are doing currently is massive, and people only later on will get to understand just how massive it is and how much hurt that is going to cause."

He said he was hearing terribly sad tales from business owners every day.

"I've been talking to lots of people in small businesses - which is where I've basically come from - and those stories are horrifically sad."

"They are hurting very badly, some people are going to lose businesses they spent 30 or 40 years putting together."

"Some people, who thought they might have retired, are not going to be able to do that - a lot of people are going to lose their jobs."

The country was only at the "very beginning of what we are seeing there", he said.

"So for those that are saying we should extend it, I am saying, 'just be really careful because the level of long term damage this causes to New Zealand's society is hard to underestimate."