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CORONAVIRUS - The situation in New Zealand

1. General situation

Businesses will maintain heightened cleaning protocols, perspex protection screens in some cases and physical distancing under all circumstances. There will still be a limit on the number of customers allowed in stores, restaurants, public transportation, theatres and libraries at any one time. Farming, manufacturing, business services, government, logistics and education all to resume under the new guidelines. Though schools and universities will open up, university courses in the coming week to remain online only, schools to re-open with fewer children per class. 

Bars, funerals (over 10 attendants) and mass gatherings are considered highest risks and further restrictions lifted later in the month. Tourism related activities are expected to take longest to re-open fully as the borders are virtually closed and internal flights only to resume at limited capacities.

The New Zealand ministry of Foreign Affairs & Trade and the ministry of Business & Innovation (MBI) are actively looking into possible exemptions towards extra-ordinary travel facilitations for staff of Flemish companies to execute supply / maintain 'essential services' and support existing contracts in New Zealand whilst the country is in Level 2.

If any questions or problems in that regards, please contact the FIT New Zealand office and we will facilitate with our counterparts here.

Latest updates and complete overview of instructions on the New Zealand government’s site  www.covid19.co.nz         

2. Exit strategy

Return to Level 2 could happen as soon as mid-May. 

  • The disease is contained, but the risk of community transmission remains.
  • Physical distancing of 1 meter outside the home (including on public transport).
  • Gatherings of up to 100 people indoors and 500 outdoors allowed while maintaining physical distancing and contact tracing requirements.
  • Sport and recreation activities are allowed if conditions on gatherings are met, physical distancing is followed and travel is local.
  • Health services operate as normally as possible.
  • Most businesses open, and business premises can be open for staff and customers with appropriate measures in place. Alternative ways of working are encouraged, such as remote working, shift-based working, physical distancing, staggering meal breaks, flexible leave.
  • Schools and Early Childhood Education centres open, with distance learning available for those unable to attend school, such as people self-isolating.
  • People advised to avoid non-essential inter-regional travel.

3. Economy

a. Economic impact

Amid fears of a global recession, New Zealand officials fear almost every sector to be seriously hit, certainly tourism, hospitality and aviation/transport.

New Zealand's economy is likely to suffer a bigger coronavirus blow than most in the OECD, new research says.

The OECD has put out a new report evaluating the impact of Covid-19 on economic activity. It does not take into account Government stimulus in those countries.

It said the initial direct effect of shutdowns could be a decline of between 1/5th and 1/4 in most economies as spending dropped by about a third.

"Changes of this magnitude would far outweigh anything experienced during the global financial crisis in 2008-09. This broad estimate only covers the initial direct impact in the sectors involved and does not take into account any additional indirect impacts that may arise."

New Zealand would see an initial drop of almost 30% in activity, the OECD said, compared to about 15% in Ireland, 22% in Australia and 25% in the United States.

The implications for annual GDP growth would depend on the magnitude and duration of national shutdowns, and the extent of reduced demand, the OECD said.

"The scale of the estimated decline in the level of output is such that it is equivalent to a decline in annual GDP growth of up to two percentage points for each month that strict containment measures continue. If the shutdown continued for three months, with no offsetting factors, annual GDP growth could be between 4-6 percentage points lower than it otherwise might have been."

The economic impact is to be significant but very possibly better than OECD expectations as the report did not take into account the efforts being made to mitigate it, such as the Government's wage subsidy. 

Performance could be below OECD average as New Zealand has greater reliance on tourism (largest industry prior Coronavirus).

b. Trade barriers

Botst u buiten de EU op handelsbelemmeringen of andere problemen op het vlak van markttoegang? Laat het ons weten via handelsbelemmering@fitagency.be. Wij analyseren uw aangifte en maken die via de geijkte kanalen over aan de bevoegde instanties.

c. Measures for economic relaunch

An elaborate package is on offer since lockdown and constantly tuned, tax facilitation, wage subsidies for both smallest and large organisations, etc. - https://www.beehive.govt.nz/feature/covid-19-economic-response-package  

The government has brought in the banking sector in its appeal to unite in the support to the economy and New Zealanders (mortgage holidays, tax & fee breaks, active scanning for support needs amongst customers).

d. Economic outlook

Food production and export is slowly picking up again and could be first sectors to drive economic bounce back.

Construction and infrastructure works will be amongst the first sectors to restart around the country.

e. Short term opportunities

With the economy now full opening up and considering the government support for wages, tax relief, mortgage holidays etc, Flemish exporters should find the original New Zealand markets functioning again as expected and all major channels-to-market to function as before, albeit with some reduction in throughflow and consumption, often outcomes of the physical distancing.

With foodservices now fully resuming, we expect the demand for F&B from Flanders to pick up substantially in the coming weeks.

Sectors as F&B/agritech/technology/med devices/cleantech expected to make a relatively fast recovery with most markets to be continuous.

Special mention for pharma & medical devices, both import needs and local industry growth in view of reducing overseas dependency.

ICT solutions expected to do well from the crisis, including in New Zealand as digital is expected to remedy a lot of the challenges.

f. Long term opportunities

Aviation/tourism/hospitality are expected to experience a long term recovery with the loss of many businesses as it may be many months before international visitors, tourist, conference visitors, etc., will be confident to travel again.

4. Useful links

5. Dossier Coronavirus

Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

20 mei 2020