COVID-19 has led to the shutdown of international travel and with it the tourism industry. This will be a real blow to New Zealand’s export figures. Rural communities that had significant tourism operations will have to rely on horticulture and pastoral farming in the foreseeable future for employment opportunities.
There is no going back to normal, COVID-19 will have an unprecedented impact on our world. Although the full impact has yet to be determined, it will continue to disrupt our lives for weeks and months to come. We expect a significant economic slowdown to occur from this shock, bringing increased uncertainty. What will this mean for our nation’s exports industry in 2020? It is going to be a bumpy ride, but with exports being dominated by food, demand will remain, provided we can get our products on the boat.
As mentioned, tourism will be severely impacted, as New Zealand’s largest export contributor, this $16 billion industry grinding to a halt will have a significant impact on our export figures. Even if COVID-19 can be eliminated in New Zealand, it is unlikely the border will be open to international tourists until the pandemic is under control globally, and economies have sufficiently recovered for people to have disposable income for travel.
Another significant export earner is forestry, this industry was already negatively impacted by declining export prices in late 2019. The COVID-19 outbreak shook the industry further, causing disruption and delaying any chance of recovery. While China is working to restart their economy, the lockdown, and its effect on the domestic sawmills, will impact on the recovery of the forestry industry in 2020.
It is going to be a bumpy ride, but with exports being dominated by food, demand will remain, provided we can get our products on the boat
In other industries, exports are expected to continue, though initial supply chain disruptions are likely. New Zealand is also moving into peak season for products such as kiwifruit and apples that are starting to harvest. Typically, almost half of the seasonal workforce is obtained from overseas, predominantly through the Recognised Seasonal Employer (RSE) scheme , or tourists on working holiday visas. This year, the New Zealand Kiwifruit Growers Incorporated, estimate 20,000 seasonal workers will be needed for the 2020 kiwifruit harvest, all of which will need to be sourced domestically.
Redeploying workers to horticulture from other affected industries, particularly forestry, has already begun. However, unlike harvesting and processing of wine, harvesting, packing, and distributing kiwifruit are more labour intensive than products like wine. This will be challenging for pack houses and pickers, to maintain production while maintaining sufficient distance to prevent the spread of COVID-19. These redeployment opportunities might also not be practical across the country, with some tourism hotspots not close to where horticulture operations are positioned.
Other key export sectors, such as meat and dairy will be able to continue exporting. For these products, demand will continue and the labour force should be able to operate while maintaining the recommended social distancing practices. The key challenge in the initial months will be to get products harvested and transported as efficiently as possible. While imports of goods and services will also be reduced, the Current Account deficit ($9.2 billion in 2019) are expected to increase significantly in 2020.