According to New Zealand Finance minister Grant Robertson, the coronavirus outbreak will have a serious impact on the nation's economy in the short term. The government may need to step in if the economic situation deteriorates.
Grant Robertson said if the virus becomes a global pandemic that leads to a worldwide downturn or recession, it may be necessary to consider immediate fiscal stimulus to support the economy.
“We go into this situation with the economy in good shape. We are in a strong position to stand up to the economic and health impacts of coronavirus,” Robertson said in a speech in Auckland on Thursday. “This will have a serious impact on the New Zealand economy in the short term.”
Robertson said in the short term the tourism industry would be greatly impacted by reduced tourism from China, as would other service industries, as well as the logging industry and food exports. “We also know that the supply chain disruption in China is having some effects here in New Zealand, where domestic companies rely on imports from China that are not moving at this time."
"Current analysis of the economic impacts of coronavirus from various forecasters has focused on a scenario where the virus is contained and there is a short, sharp impact on the global economy in the first half of 2020, before activity returns to normal levels.”
China is New Zealand’s top trading partner, accounting for 27% of its total exports last month. On an annual basis, 28% of New Zealand’s total exports were to China.
New Zealand’s exports have taken a major hit since the epidemic, with many goods’ exports facing delays and cancellations. Pessimism among New Zealand businesses grew in January as the outbreak caused widespread alarm about the economic outlook, an ANZ Bank survey showed.