3 Feb 2020

Coronavirus' economic impact will be 'worse that SARS', economist says

3:04 pm on 3 February 2020

The economic impact of the Coronavirus outbreak is expected to be sharp and short.

Workers producing face masks at a factory in Handan in China's northern Hebei province, on 22 January 2020.

Workers producing face masks at a factory in Handan in China's northern Hebei province. Photo: AFP

The closure of the border to travellers from China and Air New Zealand's suspension of flights between Auckland and Shanghai are the latest moves to counter the spread of the virus.

Kiwibank chief economist Jarrod Kerr said the virus outbeak would undoubtedly hit New Zealand's economy more than the Sars outbreak did 17 years ago.

"China today is a different beast," he said.

"Let's face it, it is the second largest economy on the planet, so a slowdown in China has a much larger impact on the global growth outlook than it did in 2003."

China takes more than a quarter of New Zealand's exports, compared with somewhere about 5 percent in 2003, before New Zealand and China had a free trade agreement.

He expected tourism numbers to fall in the first half of the year, along with a reduction in physical trade.

Overseas students coming to New Zealand to study may also be delayed or deterred from coming.

So far only fresh food and other produce have been immediately affected by the outbreak.

"It will take a few months for us to see it, but it is pretty clear it is going to have an impact on our first quarter."

However, he said the impact would be short-lived.

"I do think things will bounce back, once this virus is contained, hopefully in the next few months."

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