Coronavirus: Kiwi importers next in line to feel effect of economic fallout

It's not just New Zealand's exporting sector that will see the fallout from the coronavirus, but also Kiwi businesses importing goods from China, says a leading economist. 

The virus has now claimed more lives than SARS, killing more than 800 people worldwide, most of those in China. 

The outbreak has rattled markets and sent the world's second-biggest economy into a tailspin, as authorities around the world try to stop the spread of the virus.

Economist Cameron Bagrie says anything that affects China is bound to have a flow-on effect to New Zealand. 

"China is a big part of the global supply chain," Bagrie told The AM Show on Monday. "The China manufacturing sector is absolutely massive and the feedback is a lot of stuff is just getting shut down. This is not just impacting China, it's impacting the rest of the world."

New Zealand export industries such as forestry and seafood were particularly at risk, Bagrie said. But Kiwi business importing goods from China would also see the fallout.

"We import about $13 billion of goods from China - they are the global supply chain, they're not just part of it."

Many countries - including New Zealand - have suspended flights to and from mainland China, in a bid to stop the virus' spread.

Last week, Apple announced it would be closing all its stores and corporate offices in the country to protect its workers. McDonald's and Starbucks also said they would be shutting their doors in Wuhan and neighbouring cities while the outbreak continues.

Bagrie said the world was waiting with bated breath to see just how bad the economic impact of the virus - which has shown no sign of being brought under control - would be.

"We know the news is not great, the real issue is: how bad is it going to be? Can this thing be contained?

"The global economy is very vulnerable and it only takes a small fuse to set off a pretty big bomb. And what we've got around the globe at the moment is that policy makers do not have an awful lot of policy ammunition in the form of we can't keep taking interest rates even lower because in a lot of countries they're already negative. So if we start to see some problems around the globe they're going to be hard to contain."

The import and export sectors are not the only industries facing challenges as a result of the outbreak. Tourism too is struggling, with operators reporting a marked fall in visitor numbers and scores of tours cancelled.