New Zealand immigration confounds forecasters as arrivals surge
Total net arrivals over the two years is expected to be more than 176,000 which is a whopping 82,500 or 88% more than forecast in May.
By Bloomberg | Updated:
New Zealand’s immigration surge continues to stump forecasters, with the government’s own advisers now seeing tens of thousands more people settling than they anticipated in the middle of the year.
Data released by the Treasury Department in its half-year update Wednesday show annual net immigration is projected to be 117,700 in 2023 — more than double the forecast in May’s budget. The outlook for 2024 is now for 58,500 net arrivals, 43% higher than the mid-year analysis.
That means total net arrivals over the two years is expected to be more than 176,000 which is a whopping 82,500 or 88% more than forecast in May.
The population surge is double edged for policymakers. The flood of foreign workers has helped ease labor shortages and slow wage inflation, but the central bank has identified the extra demand for rental housing or permanent homes as an upside risk to inflation.
The return to normal immigration inflows of around 40,000 a year now won’t occur until 2026 rather than the end of 2025.
Reserve Bank Governor Adrian Orr Wednesday reiterated the risk that high immigration may mean the bank needs to remain more restrictive for longer with monetary policy.
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The Treasury is also wary. It completed its forecasts in late November and since then a report showed net immigration hit a fresh record of 128,900 in the year through October. That suggests the 2023 inflow could exceed the 117,700 projection, it said.
“The impact of migration flows on the outlook remains uncertain,” it said in the economic update. “Changes in the level and composition of flows could result in net demand effects that are either more or less intense than assumed.”
