Less economic support from net migration and tourism shows the need for more OCR cuts
The annual net immigration inflows recorded in July have significantly decreased, reaching their lowest level since early 2023, while annual tourism arrivals have plateaued, a report by the ASB found.
An economic note about the migration and tourism in New Zealand by ASB chief economist Nick Tuffley found that both the annual net permanent and long-term (PLT) migration inflows decreased to such levels because of the easing of arrivals and the rise in departures.
“We now expect annual net migration inflows into NZ to approach 30,000 persons by year end, a sharper pace of decline than earlier envisaged. There is the risk that net inflows fall faster than this and the possibility that net PLT outflows become more of the norm for 2025,” said Tuffley.
Tuffley said that the inbound annual tourism inflows into New Zealand were below the numbers recorded during the peaks before the onset of the pandemic. He added that there were little signs that point to inbound tourism numbers becoming higher.
With the easing of economic support from net immigration and tourism inflows, economic growth is expected to be affected and will lead to a greater spare capacity, giving the Reserve Bank of New Zealand another reason to lessen the degree of its monetary policy restraint.
“July saw a net permanent and long-term inflow of 3,030 persons in seasonally adjusted terms, a tick up on the upwardly revised 2,880 persons June net inflow,” said Tuffley, adding that the numbers for monthly arrivals and departures fell by 3.8% and 5.9%, respectively.
Meanwhile, the tourism sector saw its visitor numbers increase by 2.2% in seasonally adjusted terms in July. Despite this, the number of annual visitors barely changed, with the record being lower than the highs seen prior to the pandemic.
“This is largely balanced by an increase in short-term departures of New Zealand citizens, indicating a significantly smaller net tourism benefit to the New Zealand economy,” said Tuffley.
In most markets, the annual tourist inflows saw an increase, with China and Australia seeing 47% and 15%, respectively, but still being lower than the record set before the pandemic.
“October increases in the NZ international visitor levy (to $100 from $35) are unlikely to significantly impact visitor numbers. However, our concern is that challenging economic times across the globe could cap tourism numbers to NZ,” said Tuffley.
