Coronavirus could come at 'catastrophic cost' to New Zealand's economy

Source: 1News

A new coronavirus has infected more than 4500 people worldwide and while it hasn't reached New Zealand's shores yet, the knock-on effects are already being felt in our economy.

MCP spent thousands of dollars preparing to show off their products at a major trade fair in Shanghai, but now it's been indefinitely postponed.

"The cost to us as well as other companies in New Zealand will be catastrophic," sales and marketing manager Sharron Schlegel told 1 NEWS.

Globally the effect is already being felt, with markets plummeting.

ANZ released its global economic outlook today and warned the effects of the virus on the Chinese economy could be catastrophic.

That would inevitably have some flow-on here.

"The closest comparison is to think back to the SARS virus in 2003 and one study estimated the impact on the New Zealand GDP at 0.8 per cent," NZIER principal economist Christina Leung told 1 NEWS.

Food exports and imports and tourism are likely to suffer the biggest blows.

Simon Cheung, from the New Zealand-Chinese Tourism Association, says they've had around 20 per cent of people cancel or reschedule.

Last year, Chinese visitors spent $1.5 billion in New Zealand.

Although there's been a slowdown in tourists coming from China recently, it's expected to surpass Australia as our largest tourism market by 2024.

The Chinese government has banned big group tours due to the coronavirus and that's already being noticed in tourist hotspots here.

"It's very significant for big tourist groups, we still see some come in to the country for individual [tours], so hopefully the individual can make up a little of the whole number," Mr Cheung says.

Ms Leung says only time will tell the true impact.

"The longer this persists and people have to stay at home and not move around, the more likely it'll have an impact on the Chinese economy and of course, in turn, for demand for New Zealand exports."

The Ministry for Primary Industries says there are no formal restrictions on imports or exports, although it's aware some exports of rock lobster - usually a Chinese New Year delicacy - have been cancelled.

Back at MCP, they hope insurance will help out in the short term.

But in the near future, they are unlikely to be the only Kiwi businesses hurting.