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The Ministry of Health said a woman in her 70s died early yesterday in Grey Base Hospital, after testing positive for Covid-19.
The woman was admitted to hospital with suspected influenza, but a coronavirus test came back positive on Friday.
The woman had an underlying chronic health condition.
As a precautionary measure, the West Coast DHB placed 21 staff in self-isolation for 14 days from their last involvement in the patient's care.
Mayor Tania Gibson said the death was "heartbreaking".
"It's come as a big shock to our community," she said.
"Our thoughts do go out to the family."
The death had also pushed the "key message" that people needed to stay home during the Level 4 lockdown.
Mrs Gibson had heard stories of people who were not following the rules, and were increasing the sizes of their isolation bubbles.
"Now, more than ever" people needed to obey the rules, she said.
She was concerned the death might spark further panic among the public, but stressed everyone should remain level-headed.
"It's brought it all home to everybody that this is very serious.’’
University of Otago department of psychological medicine representative Christopher Gale said people would "naturally be sad" and "share in the grief of the family of the first person who has died of Covid-19 in New Zealand".
‘‘A certain amount of gentleness and consideration has to be given to her family and friends, who will be grieving, and may be mourning from a distance," he said.
"What we need to do ... is care for and comfort each other. This is not a time to amplify worry.
"If you are very worried, calling 1737 or Lifeline would be a good start.’’
Victoria University of Wellington clinical psychologist Dr Dougal Sutherland said the news was a "sobering statistic" for those who may have believed New Zealand could avoid coronavirus deaths.
"The fact that the death occurred on the West Coast may further underline the crisis we face,’’ he said.
‘‘If the death was in Auckland then some may have been able to dismiss it as being related to ‘others' and not ‘us'. But this woman was ‘us'. Not a foreign tourist nor someone returning from overseas. Covid-19 is here and it is real.’’
- Do you have symptoms of the coronavirus? Call Healthline 0800 358-5453