Prepare for virus impact — Reserve Bank governor

Businesses should start planning for the possible impact the coronavirus outbreak might have on their bottom lines, the Reserve Bank governor has urged.

Governor Adrian Orr drew a near capacity crowd when he spoke at Hamilton’s Claudelands Event Centre yesterday.

Addressing the impact the coronavirus outbreak might have on New Zealand’s economy, Orr said he couldn’t give a definitive answer.

‘‘I know for certain I have no idea what’s going to happen next. If I did, it would be really boring. Why would you get out of bed everyday?’’ Orr told the gathering.

Prior to the coronavirus breakout, the New Zealand economy was predicted to grow at close to 3 per cent this calendar year. The Reserve Bank is now testing the assumptions underpinning its projections, Orr said.

‘‘Don’t try and predict, just think about preparation from your business side, I know we’re doing this at the Reserve Bank.’’

The coronavirus outbreak is a non-linear event and presents challenges not dissimilar to events such as the Sars outbreak, bird flu, and foot and mouth disease.

‘‘Folks, liquidity is probably going to help, so talk to your bankers and make sure they don’t start sucking that away from you.

‘‘And bankers, be long-term and be hard thinking about this sort of stuff.

‘‘These events are always going to happen, it’s just this year’s activity and, who knows, it’s probably not the only one this year. So all businesses should always have that preparation.’’

Orr said the Reserve Bank is also doing ‘‘a lot of mahi in the background’’ around what low or negative interest rates would mean for the New Zealand economy.

‘‘Can banks do a negative number if it was a small negative interest rate?

‘‘Now, all of this is preparation, it’s not a prediction.’’