As the world’s second-largest economy rushes to contain the deadly coronavirus which has killed more than 360 people, what effects will it have on some of New Zealand’s key industries in the short term?
From Monday, foreigners arriving from or transiting through China will be refused entry into New Zealand in an attempt to prevent coronavirus from spreading in the country. Only New Zealand citizens, permanent residents, and their immediate families will be allowed entry from China, but they’ll be required to self-isolate themselves for 14 days from their date of arrival.
NZ Customs also announced that all passengers entering New Zealand will no longer be allowed to use electronic gates. Instead, all arrivals – including citizens and permanent residents – will need to be processed manually so significant delays should be expected.
Airlines are also starting to cancel flights, including two which were due to arrive in Auckland yesterday as well as a departing flight set for Guangzhou. Air New Zealand also announced it would temporarily halt all flights to mainland China with its Auckland to Shanghai service – which runs seven times a week – suspended from February 9 through to March 29. However, the airline is still selling flights from Auckland to Beijing through its alliance partner Air China.
Prior to the outbreak, 40,000 travellers were expected to arrive from China during February. They were expected to spend anywhere between $4,000-$5,000 each – spending which New Zealand is now likely to miss out on.
Tourism Industry Aotearoa (TIA) estimates that New Zealand will have around 20,000 fewer visitors representing a loss of approximately $100 million. “This is a pretty severe and sudden shock,” TIA chief executive Chris Roberts told Stuff. “Hopefully businesses are resilient and are able to cope with this, but the uncertainty is, how long will this go on?”
Last week, China announced it was banning its citizens from all overseas group tours and flight/hotel packages, leading to mass cancellations for many tour operators in New Zealand. At the time, TIA confirmed that some larger operators were anticipating losses that would run into the millions of dollars per month, with an estimated 9,000 cancellations already reported.
Hotel owners and operators have also expressed their concerns as thousands of new rooms are expected to become available this year, potentially creating an oversupplied market if there aren’t enough tourists to fill them. Retailers are also bracing for the impact declining tourists will bring, with some retailers already beginning to tighten their belts.
Tourist hotspots like Rotorua and Queenstown are expected to bear the brunt of the impact. Queenstown mayor Jim Boult told RNZ that the timing of the outbreak “couldn’t be worse” as it coincided with travel during Lunar New Year.
With China making up the majority of international students in New Zealand, the ban on arrivals will no doubt have a significant impact, particularly as it kicks in right at the start of the academic year. After all, education is now New Zealand’s fourth-largest export sector with Chinese students making up around a third of total earnings ($4.8 billion) from international education.
Last week, the Ministry of Education advised all students and teachers who’d travelled to China and are at risk of contracting coronavirus to stay away from school for 14 days. However, reports show that school enrolment rates from China have so far remained steady.
Many firms exporting goods to China are already struggling with the effects of coronavirus. At Gisborne’s Eastland Port, log exports to China – the port’s main source of revenue – have been halted until further notice, while forestry workers across New Zealand have reportedly been told to go home.
The export of live lobsters has also been suspended after a huge drop in demand as China cracks down on public gatherings. Harvested lobsters are currently being held in facilities in New Zealand which could have a significant economic impact on the industry if a solution doesn’t get found soon. Cherry exporters from central Otago are also expecting to be met with quieter than usual demand.
Fonterra, New Zealand’s biggest exporter, says it’s keeping a close eye on the situation in China but says it won’t know for at least another month if sales have taken a hit. Meanwhile, the meat industry is also said to have cut back on some production for now.
As the virus spreads, more industries will no doubt be affected in the coming weeks. Parallels have been drawn to 2003’s Sars outbreak, but the long term economic impact of coronavirus is expected to be greater as trade between China and New Zealand has increased since, and Sars – while deadlier – was less easily spread. According to one economist’s estimates, the virus could knock a cool $300 million off New Zealand’s economy by the end of next month.
The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
The Spinoff Daily gets you all the days' best reading in one handy package, fresh to your inbox Monday-Friday at 5pm.