Migration still running hot as annual net gain tops 72,000

Annual gain has topped pre-Covid records but monthly figures show normal service resuming. Photo / NZME

New Zealand’s population has continued to grow at pace with new data for the year to April showing a net migration gain of 72,300.

That figure is now substantially past the peak of the migration boom New Zealand experienced last decade and is surpassed only by the record set when Kiwis returned home as the pandemic hit in early 2020.

But there are signs that more normal levels are returning with the monthly net migration gain falling back to just 5800.

On a monthly basis, April had 16,500 arrivals and departures of 10,700 for a net gain of 5800 - a return to more normal levels after elevated gains of more than 13,000 in February and March.

The rate of net migration, which picked up sharply six months ago, had New Zealand on track to hit annual population gains in excess of 100,000 if it is sustained.

Treasury and the Reserve Bank have made economic forecasts based on the rate of net migration falling back as pent-up demand eases.

Treasury has forecast an annual net migration gain of 66,000 for the calendar year.

While one month didn’t make a trend, the sharp slowing in net permanent and long-term (PLT) inflows in April raised the possibility that the boost to the resident population from net immigration might not be as sizeable as earlier thought, said ASB senior economist Mark Smith.

“Today’s figures add some weight to the view that we are not in the midst of a net immigration super-cycle,” he said. “On current trends, annual net inflows are likely to peak well below 100,000 persons by the end of the year. We expect net immigration inflows to begin to recede towards historical norms towards the end of the year and into 2024.”

The 171,800 migrant arrivals for the April 2023 year was still well above the long-term average of 119,000 for pre-Covid April years (2002–2019).

The 99,500 migrant departures for the April 2023 year were also above the long-term average of 91,500 for pre-Covid April years (2002–2019).

The pre-Covid net migration record was 64,672 in the year to July 2016.

The provisional net migration gain of 72,300 in the year ended April 2023 was made up of a net loss of 26,100 New Zealand citizens, which was more than offset by a net gain of 98,400 non-New Zealand citizens, StatsNZ said.

This was consistent with migration patterns before the Covid-19 pandemic, where New Zealand usually had an annual net migration loss of New Zealand citizens and an annual net migration gain of non-New Zealand citizens.

Westpac’s senior economist Michael Gordon said noted that about half of the decline in April was due to a drop in migrant arrivals.

“However, the level of inflows remains elevated compared to history,” he said.

“The bigger surprise was a sharp rise in migrant departures for the month. Around a quarter of this was due to a rise in New Zealanders heading overseas but the remainder was spread across all major source markets.”

The Government came under pressure from critics for introducing an overly restrictive immigration policy as businesses suffered from labour shortages.

It made major changes to that policy late last year, although pent-up demand from the closed-border Covid-era is seen as the biggest driver of the big surge.

“We think the surge in net migration is largely catchup from the pandemic,” said Kiwibank senior economist Mary Jo Vergara.

“Migrants whose plans to come to New Zealand were stymied by Covid border restrictions are coming now.”

Kiwibank sees migrant flows naturally falling back.

“On a quarterly basis, we believe we’re nearing peak net inflows,” Vergara said.

Annually, net migration is still climbing, based on the rolling average.

We were still on track to hit 95,000-100,000 this year, she said.

“That’s a lot, but it’s largely baked in. Given the big gains over the past few quarters, we’re more than halfway there,” she said.

“We expect net migration to ease back to around 35,000-40,000, marginally higher than our previous forecast. That would still be well below the average of the five years preceding Covid (close to a 60,000 net inflow).”

It was difficult to compare to the pre-Covid period as the 2014-19 period was the largest migration boom in recent history, she said.

“Nevertheless, falling back to 35k-40k reflects tighter immigration settings and strong competition from other developed countries for skilled migrants.”

There was a provisional net migration loss of 10,200 people to Australia in the year ended September 2022. This was made up of 17,900 migrant arrivals from Australia to New Zealand, and 28,100 migrant departures from New Zealand to Australia.

Traditionally, there has been a net migration loss from New Zealand to Australia. This averaged nearly 30,000 a year during 2004–2013, and about 3000 a year during 2014–2019.

Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist as well as presenting and producing videos and podcasts. He joined the Herald in 2003.