'The ones that are still hiring are seeing a disproportionate number of applicants, many of whom are migrants'
High immigration has long been a driving force for New Zealand's economy, but with migration rates now rapidly declining, experts are raising concerns about the country's economic outlook.
The 133,600 migrant departures in the July 2024 year are, provisionally, the highest on record for an annual period, according to StatsNZ.
Provisional estimates for the July 2024 year compared with the July 2023 year were:
- migrant arrivals: 200,800, down 6 percent
- migrant departures: 133,600, up 36 percent
- annual net migration: gain of 67,200, compared with a net gain of 116,200..
Despite still being high by international standards, the swift drop has analysts worried.
"The rate is back to early 2023 levels, and there’s a real risk net inflows could fall faster than expected," ASB senior economist Mark Smith told RNZ, warning that this could slow economic growth further and potentially lead to a Reserve Bank interest rate cut.
Downturn in migration puts pressure on economy
The downturn in migration is putting pressure on New Zealand’s already fragile economy. Kiwibank chief economist Jarrod Kerr told RNZ that last year's surge was fueled by pent-up demand after the pandemic border closures.
"We've seen the massive spike, but now it's coming off quite quickly, kind of in line with what we were forecasting," Kerr said.
BNZ chief economist Mike Jones echoed these concerns in RNZ’s report, explaining that the drop in migration has contributed to a weakening economy.
"A good chunk of our earlier momentum came from population growth, but that’s no longer the case," he said, adding that Australia’s stronger labor market may be drawing away potential migrants.
New Zealand is seeing a dramatic drop in the number of new migrant workers while simultaneously facing a record surge in complaints against employers, according to a separate report.
Job market misalignment in New Zealand
The mismatch between labor supply and demand is also an issue, with many migrants struggling to find work, as reported by RNZ.
Kerr shared that businesses have reported a large number of applicants, many of them migrants, but few have the required skills.
"The ones that are still hiring are seeing a disproportionate number of applicants, many of whom are migrants," he said. This oversupply is emerging at a time when job ads are declining, and the unemployment rate is rising.
With the economy still weak, analysts expect migration numbers to continue falling, according to RNZ. Kerr also noted that many New Zealanders are now leaving for better job opportunities abroad, adding further strain to the local economy and job market.
That includes Australia, BNZ chief economist Mike Jones told RNZ.
"If you look at our labour market and match it to what we're seeing in Australia, things are firmer there, the unemployment rate is lower and expected to rise more gradually than it is here."