WELLINGTON (Reuters) – The coronavirus outbreak could have a serious impact on New Zealand’s economy in the short term, the country’s finance minister said on Thursday, amid new data that showed businesses were feeling more pessimistic about their prospects.
Grant Robertson also said the government may need to step in with immediate fiscal stimulus if the virus outbreak becomes a global pandemic that, in turn, creates a worldwide downturn or recession.
“This will have a serious impact on the New Zealand economy in the short term,” Robertson said in comments about the coronavirus outbreak made at an event in Auckland that was shared with the media.
“It is clear that there is an immediate impact on the tourism industry, particularly given there are now very few flights between China and New Zealand,” he added.
Chinese tourists spend around $180 million per month in the peak travel months of January through to April, Robertson said.
China is also 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 everything from timber to meat and fruit facing delays and cancellations.
Pessimism among New Zealand businesses grew in January as the coronavirus outbreak caused widespread alarm about the economic outlook and the prospects of firms, an ANZ Bank survey showed earlier on Thursday.
“Our best hope is that the disruption proves short-lived, but there’s no question the export-oriented economy is reeling,” ANZ Chief Economist Sharon Zollner said in a note about the sinking business sentiment.
Robertson, however, said New Zealand’s economy is in a strong position to respond to the coronavirus.
“We are well prepared to respond to a range of scenarios that could play out,” he said.
If the virus outbreak becomes a global pandemic that in turn creates a global recession then it may be necessary to consider “immediate fiscal stimulus to support the economy as a whole and businesses and individuals through this period”, he said.
The virus is now spreading faster outside China than within, with Italy and Iran emerging as epicenters.
Global stock markets have slumped in recent days due to the prolonged disruption to supply chains and economies from the virus, which has infected about 80,000 people and killed nearly 3,000, mostly in China.
(Reporting by Praveen Menon; Editing by Tom Hogue and Muralikumar Anantharaman)