Data signals economic optimism for 2025
New Zealand has seen a rebound in net migration and tourism, signalling hope for economic stability in 2025.
December highlights in migration
December marked a turning point for New Zealand’s migration trends.
Stats NZ reported a net inflow of approximately 3,800 migrants, the highest monthly balance observed within the year. This spike was primarily attributed to a sharp decrease in foreign departures during the holiday season, a time when many migrants traditionally return home.
“Many migrants return home to visit their families at this time of year, and it’s harder than usual to distinguish between short-term and permanent movements,” said Michael Gordon, senior economist at Westpac NZ.
Throughout 2024, there was a notable shift in migration patterns. The annual net inflow was 27,091, a decrease from previous months but still significant.
This decline from the previous year's highs indicates a stabilisation of migration flows, with government policies beginning to refocus on attracting skilled migrants amid comparatively weaker job prospects in New Zealand versus Australia.
Tourism shows signs of recovery
The festive period also saw an uptick in short-term travel to New Zealand, with a 3.5% increase in overseas visitors in December, reaching about 89% of pre-COVID levels.
This recovery is highlighted by strong arrivals from the US and Germany, although Chinese visitor numbers remained subdued.
ASB weighs in on economic impact
Nick Tuffley (pictured above), chief economist at ASB, reflected on the broader economic implications of these trends.
Despite the year ending on a high note for migration, the annual figures still reached a two-year low at 27,091, signalling ongoing challenges. However, the rise in tourism has not been adversely affected by the increase in the visitor levy, showing resilience in the sector.
Tuffley anticipates a need for further monetary policy adjustments, suggesting “100bps of OCR cuts over 2025,” given the fluid economic outlook and the balance of risks.
Outlook for 2025
Looking forward, both migration and tourism are expected to play pivotal roles in shaping New Zealand’s economic landscape. The slight recovery in these areas towards the end of 2024 provides a foundation for cautious optimism.
As policies adapt to the changing global economic conditions, the focus will be on maintaining this momentum in migration and further bolstering the tourism sector to offset any potential economic downturns.
Policy implications and future directions
The data indicated that while migration may have stabilised somewhat, the ongoing global uncertainties and domestic economic performance will continue to influence the direction of both migration and tourism.
With the potential for OCR cuts on the horizon, policymakers will need to remain adaptable to sustain growth and navigate the challenges of 2025 effectively.
