Migration boom not just a COVID catch-up, economist says
In 2023, New Zealand experienced an unprecedented migration surge with arrivals surpassing departures by a staggering 142,000 – a figure that Kiwibank senior economist Mary Jo Vergara (pictured above) noted was significantly above the forecasted 130,000 due to large historical revisions.
Stabilising but high migration rates
Despite expectations for a decrease, inbound migration has remained robust and well above average levels.
“We always knew people would come flooding back to Aotearoa once the border reopened,” Vergara said. “NZ Inc. performed remarkably well throughout the COVID pandemic. Our little corner of the globe was viewed as an oasis.”
She noted that while the number of departures has risen, the inflow of new arrivals more than compensates, maintaining a high net migration rate.
Continuation of a pre-COVID trend
Vergara clarified that the current migration trends are not just a rebound from pandemic restrictions but a continuation of the migration boom that began in 2014.
“It’s no longer a simple COVID catch-up,” she said. “Rather, it’s more of a continuation of the migration boom that began in 2014. And we have upgraded our forecasts.”
Looking forward, Kiwibank now expects net migration to return to its pre-COVID average of around 40-50k.
Government policy impact and migration composition
With recent tightening in immigration criteria by the government, there could be a significant impact on arrival numbers.
“A key uncertainty surrounding our forecast is the government’s recent changes to immigration settings,” Vergara said.
Additionally, most long-term arrivals have been coming from India, with China and the Philippines also contributing significantly to the migration figures.
Economic and social implications
The influx of migrants has had mixed effects on the New Zealand economy. While helping to alleviate wage pressures through increased labour supply, it has also led to less inflationary pressure than expected. However, Vergara mentioned a surge in rental inflation, which complicates the inflation outlook.
“Rental inflation has surged to an all-time high which frustrates the inflation outlook,” she said.
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Infrastructure and future challenges
As New Zealand continued to experience high levels of migration, Vergara stressed the importance of addressing infrastructure deficits to accommodate this growth sustainably.
“But without addressing our deep infrastructure deficit, migration will likely exert more inflationary pressure than is necessary,” she said.
Read the Kiwibank analysis in full here.
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