Education, tourism hurting the most
New Zealand universities could take a hit as the education and tourism sectors suffer due to the coronavirus outbreak, a financial expert says.
The virus has spread across the world and with travel bans in place, many countries are being affected financially.
Massey University’s head of school of economics and finance Martin Berka said a possible direct effect would be people from China, where the disease originated, not being able to travel to New Zealand for tourism and education.
‘‘How long is it going to last? That’s the big unknown. It’s worth a quarter of those numbers per year. If a quarter of tourists don’t show up, that’s a ball park figure. For the education sector it’s another type of export industry. Tourism and education are the big ones. Together they’re bigger than dairy, so it’s pretty big.’’
He said universities were still trying to figure out the impact and minimise the effects of students not being able to travel.
‘‘Universities in New Zealand are funded on amodel of domestic students who are funded by the Government as well as some fees.
‘‘International students fund themselves and create a lot more revenue.’’
He said New Zealand’s overall gross domestic product could drop by about 0.5 per cent
‘‘Growth runs around 3 per cent. It’s not a disaster, but it isn’t good. You’re never going to a recession, it’s just slower growth.’’
But that was under the assumption the disease fizzled out in the next month.
If stores in China, a big trading partner for New Zealand, are shut it could be hard for industry there to receive goods and services. There have been reports of companies not able to finish building laptops because the factories that build the chips are closed. ‘‘You don’t know how long this is going to last. We all have models in economics where if you log a negative shock, how long will this shock last? Hopefully in a quarter it will be back to normal.’’