Coronavirus: Economic damage from COVID-19 will be 'very significant' - Sir John Key

Sir John Key says the economic fallout from COVID-19 will be "very significant" in New Zealand, and estimates it will be two to three years until a recovery takes place. 

Despite that, the former Prime Minister says he is optimistic that the country is in a better place than many others around the world to weather the financial storm.

"I think the economic damage is very significant because you're really closing down half the economy if not more," Sir John told the GOLFIZZ podcast.

"Some people are working from home and doing things but out the other end will inevitably come companies that go broke, redundancies, all that sort of stuff - so it's probably two or three years of working through a more recessionary environment."

Sir John, who previously served as Tourism Minister, said though some industries were able to continue functioning during lockdown to a certain extent, others had effectively shut down entirely.

"If you look at tourism it's completely binary. It's either on or off - and it's off, they can't do anything," he said.

He gave the example of Air New Zealand, which he says went from having revenue of $6 billion a year to just $500 million.

"For a company like that it's just immensely difficult because all their revenue disappears. It's like running a restaurant and saying 'I normally take $10,000 a night and now I'm going to take $200 and have to pay all my staff'. It's just impractical. So it's really difficult for tourism," he told GOLFIZZ.

He also touched on the Government's response to the outbreak, saying that conditions in New Zealand differed from more densely populated places like Italy and New York, which have been particularly hard hit. 

"You can create the arguments that people should have been in forced mandatory lockup, not self-isolation, but the reality is that the level of community transmission – it looks pretty low," he said.

Last month, Sir John praised Prime Minister Jacinda Ardern for her handling of the crisis, saying her address to the nation announcing a raise in the alert level was "faultless".

"Whatever you think of her decisions, she communicates really clearly and really well," Sir John said at the time.