Expert warns of 'significant' financial hit to New Zealand's economy after Russia invades Ukraine

Vladimir Putin's actions have sent shockwaves around the globe. Experts say soon, the ripples will reach New Zealand.

University of Otago international relations professor Robert Patman says it's only a matter of time before it will disrupt our economy.

"Quite soon, almost immediately. Decisions about transferring money and prices are made at the press of a button," Patman told Newshub. 

"We often think of ourselves as being geographically isolated, but in fact, we trade with more than 100 countries in the world. We're going to be quite significantly, but indirectly, impacted by these events."

It's raising alarm bells for businesses in Auckland. 

Skippy has managed building product company IBS for 29 years, helping to build new homes. Seventy percent of their goods come from Europe. 

"We bring product in from Germany, Poland, a little bit in Spain, Russia, Portugal," Skippy told Newshub. 

"Every week, we have between 10-20 containers leaving Europe, to come to New Zealand. It's probably the only place we can get our flooring product that will help the New Zealand market."

He says freight costs are already at an all-time high. 

"In the past 12-18 months, our import shipping prices have gone up 600 percent and rising weekly, pretty much," Skippy says. 

He's worried the Russia-Ukraine crisis will inflame the situation - and he knows it won't just have an impact on his business. 

"We have no option but to pass that on to the consumer... If it closed down or got too expensive, it would leave a big hole in the housing market in New Zealand," he says. 

Robert Patman.
Robert Patman. Photo credit: Newshub.

Patman says that threat is very real.

"Financially, it will be challenging times. The major economic effects will be a rise in gas prices, energy prices and also it's anticipated that the price of a commodity like wheat will go up.

"There will be other significant trade impacts. We've already seen the stock markets in the United States and elsewhere plunge. So that will have an effect for New Zealanders as well."

The Government has called in the Russian Ambassador to hear New Zealand's concerns about the escalating situation.

"Travel bans, export controls, diplomatic measures like calling in ambassadors, those are all measures that sit within New Zealand's tool kit and we are willing to use," Prime Minister Jacinda Ardern said. 

But the Opposition says the Government's response isn't good enough.

"I think it's a wet bus ticket. To say we've instituted a travel ban, the whole country has been in a travel ban for the last two years, so I'm sure Russia won't quake in its boots over that," National's foreign affairs spokesperson Gerry Brownlee told Newshub. 

"This is a threat to global peace and stability many have never seen in their lifetime, and the time for twiddling thumbs and putting out statements is over," Brownlee says. 

Patman says New Zealand needs to seize the moment.

"I think we may have to be a little more vocal in protecting our interests, globally. We can't just rely on great powers to do that. We've got diplomatic potential to be a constructive voice on the international scene."

"We [New Zealand] may have to start moving out of our comfort zone... I don't mean doing that on our own, but getting together with like-minded countries. There is plenty of them. I just think we have considerable credentials to do that." 

Because even though we may be small, the consequences of global conflict are too big to ignore.