A hit to New Zealand's tourism industry could be one of the more immediate effects of Britain's exit from the European Union, while mortgage and business lending rates may be left on hold.
Nervousness in the global environment may result in the New Zealand dollar falling further against the US dollar in the weeks ahead, Westpac senior economist Satish Ranchhod said yesterday.
"In time, the uncertainty will also result in higher bank funding costs for New Zealand. This means that although New Zealand two-year swap rates have fallen, mortgage rates and business lending rates are unlikely to fall as far, or may not fall at all,'' he said.
Mr Ranchhod expected trade agreements to remain in place for some time while the United Kingdom and EU negotiated the exact nature of exit arrangements.
"So at least in the immediate aftermath of the vote, New Zealand's trading relationships with the UK and the EU will be unaffected,'' he said.
He noted that the UK accounted for a much larger share of New Zealand's tourism sector than it did in merchandise exports.
The large drop in the pound against the New Zealand dollar, combined with the likelihood of a weaker UK economy, would have an impact on UK tourist arrivals in New Zealand, Mr Ranchhod said.
"So for the short run at least, we regard Brexit as a negative for New Zealand's external sector.''
While New Zealand would have the opportunity to negotiate new goods trade agreements with the UK and EU, there had been a recent swing towards protectionism, and it was difficult to see New Zealand being afforded more favourable trade conditions in either jurisdiction.
Exports
•The UK takes around 3% of New Zealand's merchandise exports, about $1.7billion. Key exports include sheep meat, wine and produce.
•The UK accounts for around 9% of New Zealand's service exports, about $1.5billion. Mainly relates to tourism. About 210,000 visitors came from the UK last year.
Imports
•NZ purchased around $1.3billion of goods, about 3% of merchandise imports and $900million of services from the UK last year, about 5% of total services imports.
•New Zealand's imports from the UK mainly relate to vehicles and machinery, as well as tourism.
Source: Westpac
