Coronavirus: Delta Variant Finds Its Way into New Zealand

As those who are interested in COVID-19 know, New Zealand recently put the country in lockdown over a single case of the delta variant. The Guardian (Aug 27) reports on how the virus got into the country:

New Zealanders lived virus-free in the six months leading up to the latest outbreak, going to workplaces, shops and sport stadiums without needing to wear masks, while children attended school. Then a traveller returning from Sydney brought the Delta variant, which escaped from a quarantine hotel.

The lockdown is extremely strict.

The lockdown prevents most people from leaving home other than to exercise, or to buy groceries or medicine. Retail stores are closed, as are restaurants – including takeaway – schools and most businesses.

CNN (Aug 27) reports on the more interesting topic -- the future. New Zealand has a zero Covid strategy. But they can stay that way for only so long.

The fortified borders have also contributed to another major casualty: tourism. Once the country's largest export industry, overseas visitor arrivals slipped by more than 98% in January 2021 compared with a year before.

Despite that, New Zealand doesn't seem to be in any rush to reconnect with the world. There's even an us-versus-them mentality among some social media users who criticize overseas New Zealanders desperate to get home for not returning sooner.

. . . Earlier this month, a Strategic Covid-19 Public Health Advisory Group said the elimination strategy could still continue, even after New Zealand reopened its borders.

On its website, the Ministry of Health explains that it will use a combination of border rules, vaccinations and public health measures to keep people safe from Covid. The country will still try to stamp out the virus -- but it may mean it relies less on lockdowns.

In a blog post that is around a year old I mentioned that tourism has a direct and indirect impact of 9.8% on New Zealand's economy. Now I'll admit I thought the impact to their economy would be much harsher than it currently has turned out to be. At the time of that post, unemployment was 4.0%. It hit a high of 5.3% in Sep 2020, but has since declined back down to 4.0% as of June 2021. With no tourism, what is driving their economy? Per Reuters (Jun 16):

Growth was largely driven by a surging housing sector amid historically low interest rates and cheap mortgages, although worries about housing affordability have led the government and RBNZ to introduce measures to try to cool the market.

That to me sounds like financial engineering that can't last forever.

Their tourism season is normally between December through March. They've already missed one tourism season. It seems to me that they'll miss this next one. Can they afford to miss another without there being some economic damage? The Ministry of Health explains that even after the country opens their borders, there will still be border rules and that the country will still attempt to stamp out the virus. We know that there are plenty of breakthrough cases for those who have been vaccinated. How restrictive will tourism be when borders are finally opened and will tourist be willing to deal with those restrictions?