Return of Virus After 102 Days Threatens New Zealand’s Recovery

New Zealand is reeling from its first coronavirus outbreak in more than three months, throwing the largest city Auckland back into lockdown and threatening to dent the economic recovery.

The country’s run of 102 days without community transmission ended late yesterday with the announcement that four new cases had been detected in an Auckland household. A further four probable cases were identified Wednesday. Authorities are trying to stop the virus spreading to avoid the fate of nations like Australia, Japan and Vietnam, which after early successes in containing Covid-19 are now battling its resurgence.

Prime Minister Jacinda Ardern today put Auckland, a city of 1.6 million people, into lockdown for an initial period of three days as health officials try to trace the origin of the infections. Social distancing rules and limits on gatherings have also been reimposed on the rest of the country.

New Zealand had been the envy of the world after it eliminated local transmission of Covid-19 with a strict nationwide lockdown in April and May, and its economy bounced back strongly once restrictions were lifted. Now that recovery may be at risk as businesses close in Auckland and chances dwindle of the nation re-opening its border to foreigners any time soon.

“From an economic perspective, the news is a blow,” said Nick Smyth, a strategist at Bank of New Zealand in Wellington. “The economy had rebounded much quicker than expected. The news overnight reinforces the still-fragile nature of the recovery.”

New Zealand’s benchmark stock index closed 1.3% lower while the New Zealand dollar fell to a one-month low. The nation’s central bank today expanded its bond-purchase program to aid the economy, saying the outlook remains highly uncertain.

Auckland Lockdown

At noon today, Auckland moved to level 3 on New Zealand’s Covid alert system, signaling people should stay at home if possible and avoid contact with others. Schools are closed for most pupils, while bars, restaurants and customer-fronting businesses have had to shut. Travel into and out of the city is restricted.

The rest of the country has gone to level 2 restrictions that include social distancing and limiting the size of gatherings to 100. In addition, all aged-care facilities around New Zealand have been placed into lockdown.

Scientists have warned that more cases are likely to be found, raising the likelihood that restrictions will have to remain in place for longer than three days.

The four people who tested positive are now in isolation and the government is racing to find all of their close contacts. Before testing positive, two of the people traveled to the North Island city of Rotorua last weekend and visited tourist attractions.

One of the infected people worked at a cold storage firm, and an avenue of investigation is whether the source of the infection was imported freight, Director-General of Health Ashley Bloomfield told a news conference.

The outbreak comes just weeks before the Sept. 19 election, with Ardern’s Labour Party riding high in the polls due largely to her successful management of the pandemic.

The leader of the main opposition National Party, Judith Collins, called for the September vote to be delayed until late November or pushed into next year.

“New Zealanders deserve better than to wonder whether or not they can even vote on election day,” she said.

Ardern today delayed the dissolution of parliament until at least Monday and said she expects to make a decision on the election by then.

©2020 Bloomberg L.P.

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