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Economy in Brief

Migration and the New Zealand Economy
by Louise Curley November 21, 2006

As a small country with a population of only 4.2 million, migration in and out of New Zealand tends to amplify economic trends that would not be noticed in a larger country. The peripatetic New Zealanders frequently go to and from Australia and the UK staying a year or more. In recent years there has been an influx of students from Asia who also tend to stay for a period of years completing their education and then returning home. New Zealand tracks these movements and publishes monthly data on net permanent and long term migration. (Total net migration and net migration by country can be found in the Haver data base, ANZ.)

Net permanent and long-term migration is derived by subtracting permanent and long-term departures from permanent and long-term arrivals. Permanent and long- term arrivals include overseas migrants intending to stay for a period of twelve months or more or permanently, plus New Zealand residents returning after an absence of 12 months or more. Permanent and long-term departures include New Zealand residents intending to stay abroad for 12 months or more or permanently plus overseas visitors departing after a stay of 12 months or more.

As the first chart shows, year to year differences in net migration are largely responsible for the unusual ups and downs in the total population. The large influx of immigrants in 2001 and 2002 had a notable effect on the housing market as can be seen in the second chart that shows the year to year changes in housing prices and net migration. The decline in net migration has, in part, been a factor in the deceleration of GDP growth that has taken place since the end of 2004 as can be seen in the third chart.

Net migration varies from quarter to quarter but the downward trend started in late 2002 seems to have abated. In the third quarter of this year, net migration was 4,965, the highest quarterly figure since the first quarter of 2004. To the extent that migration matters, economic developments in New Zealand may be looking up.

NEW ZEALAND  Oct 06 Q3 06  Q2 06  Q 1 06  2005 2004 2003 2002 2001
Net Migration (persons) 2352 4965 -1201 4772 6971 15108 34906 38198 9726
Population (000) 4152 4140 4134 4105 4065 4018 3950 3891
   Q3 06  Q2 06  Q 1 06  2005 2004 2003 2002 2001
  Real GDP (SAAR) 1.69 2.59 2.12 4.16 3.64 4.23 2.51
  House Prices (% Chg) 3.69 10.31 14.51 17.97 19.41 9.51 1.83
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