NZ: Migration back at a record high – Westpac

After a slight moderation in recent months, NZ’s net migration picked up again in May, notes the analysis team at Westpac.

Key Quotes

“The annual net inflow over the past year is just shy of 72,000 people – a fresh record high. This has seen population growth rise to its fastest pace since the 1970s.”

“In part, the high level of net migration is due to strong inflows of those on residency and work visas, with large numbers of arrivals from China, India and the UK. However, this only accounts for around half of the pick-up in net migration since 2011. Over this same period, we’ve also seen very low numbers of New Zealanders moving offshore and a higher than usual number moving back from abroad. In the case of both new arrivals and low departures of New Zealanders, our stable and positive economic conditions are a big draw card versus other regions.”

“Migration will eventually ease off as the global economy improves. But the eventual downturn is likely to be gradual, and flows are likely to remain strong in the near-term. A key reason for this is that conditions in the Australian economy, the main destination for New Zealanders moving abroad. We expect that GDP growth in New Zealand will continue to outpace that in Australia for some time yet. In addition, policy changes in Australia affecting the costs of study for international students and the costs associated with hiring foreign workers make New Zealand seem all the more attractive.”

“Migration and population growth are having a range of impacts on the economy. As well as boosting demand in areas like retail spending, we are also seeing increased pressure in terms of housing demand and strains on infrastructure. Migration also affects our productive capacity, helping us to meet essential skill shortages in areas like construction. Balancing these influences is a challenging task, and the issue is receiving a large amount of attention ahead of September’s election. If we do not see migration naturally easing off, this would increase the chance that we see some sort of policy change over the coming year.”