Economist’s prediction anticipates no foreign visitors to New Zealand until late 2020

New Zealand is unlikely to see any overseas tourists arriving until the end of 2020, according to Westpac New Zealand Chief Economist Dominick Stephens.

The bank’s latest economic bulletin paints a grim picture for tourism, with Stephens advising “the hardest-hit industries will be those involved in tourism and hospitality related activities, including tour operators, car rental firms, restaurants, cafés and bars.

“We are assuming an almost complete absence of foreign tourism until late this year, and only a gradual recovery beyond that.”

The report suggests that around 207,000 jobs will be lost in New Zealand, equating to 7% of the workforce, and pushing the measured unemployment rate up to 9%.

Stephens adds “layoffs and business failures are more likely to occur in industries that feature a high proportion of small firms, such as wholesale and retail, hospitality, rental and leasing, tourism and small manufacturers. Smaller firms are more likely to lack the deep pockets required to tide themselves over during the period of disruption.

“Once the crisis has passed, however, it will be small business that leads the recovery. Cheap money and low barriers to entry will encourage new entrepreneurially driven firms to spring up. Large firms are more likely to survive the downturn but will be less dynamic because they will focus on reducing debt.”

Stephens’ predictions concur with suggestions that the New Zealand Government may keep borders restrictions in place until a vaccine for Covid-19 is available - which scientists say could be 12 to 18 months away.

As reported by RNZ, tourism providers will be looking at domestic visitation when the local lockdown eventually lifts, with some signalling it could be years before New Zealanders could travel internationally again.

Tourism Industry Aotearoa Chief Executive Chris Roberts said businesses were going into hibernation to try and weather the border closure and lockdown.

Roberts advised “businesses need to cut their costs right back, look after their staff as best they can, and go into hibernation and hopefully be able to emerge again when the opportunity arises.

"If they're not able to come back then we'll just have a devastated industry and be in no place to rebuild tourism in New Zealand."

International tourism brings in about $1.5 billion a month to the New Zealand economy - but Roberts said domestic tourism could be a saving grace as it was usually worth $2 billion a month.

He added “there won't be a return to travel as it was in the past and the new normal will take some time to bed in. We're looking at a five-year recovery for international travel. New Zealand will have to have much more focus on domestic travel and that's where we'll turn to first.”

Images; Queenstown (top), Westpac New Zealand's unemployment predictions (middle) and Chris Roberts, Tourism Industry Aotearoa Chief Executive (below).