In our evolving interconnected world, coronavirus has become the perfect tabloid media clickbait. It plays straight into our anxieties and fears. We are lemmings with an inherent magnetism towards mass hysteria.

The unknown and the risk in what is happening, is human behaviour. Economies are driven by confidence.

Here in New Zealand the early impact was on forestry - specifically logging. The Chinese simply don’t need logs right now and New Zealand forestry owners have had to stop harvesting and retrench their crews. Supply chains have broken down and it has become harder to export.

The economic impact of Covid-19 quickly moved into tourism with a dramatic slow-down from China and then the whole tourism market. Nobody wants to jump on long haul flights and New Zealand is not a spur-of-the-moment destination. Tourism is in serious trouble and there is no quick fix.

With the sudden change, some businesses are struggling to pay their rent and that risks spilling into the wider economy and property prices. Retailers were already finding business hard. They have had no ability to move margins and had to face higher rent costs and higher minimum wages.

‘With the sudden change, some businesses are struggling to pay their rent and that risks spilling into the wider economy and property prices’

When it comes to commercial property the risky areas will be retail, hospitality, and tourism-related properties. Although hotel brands are part of big multi-national corporates, the reality is that they are essentially franchises run by local operators.

In the recent past, these operators signed up to expensive leases on the basis of an undersupply of hotels and rapidly growing tourism. How quickly the world changes! These businesses are highly leveraged, and some won’t have the balance sheet to cope with lower room rates and lower occupancy.

The other side of the economic crisis will be our medical system. It struggles to cope with the normal flu season, let alone what is coming this winter. The worst of it will be around August and September, so we have time to prepare.

The Good News

For a start pandemics do end. This family of viruses highlights the risks of living in densely populated cities, and the importance of food security and modern farming practices. In a warped way nature is fighting back! Asia, and China in particular, is going to have to seriously reconsider its food safety practices with multiple incidents of viruses jumping species – bird flu, SARS, MERS, and now Covid-19.

Closer to home our neighbour Australia has been the lucky country with its rich endowment of natural resources. I wonder if that is changing with unbearable summer temperatures over 40 degrees and wildfires.

Right now, I couldn’t think of a better country to live in than New Zealand. Surrounded by water, miles from every hot spot in the world, still reasonably temperate climate, natural beauty, clean air, water, and self sustainability.

Most reports I read forecast New Zealand to have a major economic boom towards the back-end of the 2020’s as Asian economic growth peaks. If I consider growing Asian wealth, New Zealand Inc as a brand, and how Asian economies respond to the current risks long-term, then I think we could head into a very strong boom off the back end of the current crisis. For now, bunker down and ride it out. ■