Will there be a rush of younger Kiwis heading off on their OE? Photo / Michael Craig
Will there be a rush of younger Kiwis heading off on their OE? Photo / Michael Craig
New Zealand faces its largest net migration outflow since 2011 as Kiwis depart for higher-wage international jobs, Kiwibank says.
An annual net loss of up to 20,000 migrants was possible this year as borders opened, Kiwibank economists have estimated in new research.
The number of departing Kiwis is expected toreturn to pre-Covid levels much faster than long-term migrant arrivals.
"The phased timing of border reopening is expected to throw the net migration figures around over the next 12-18 months. Long-term departures are forecast to increasingly exceed arrivals over 2022," Kiwibank said.
"Annual net migration outflows could reach 20,000 by the end of the year. That's similar to the last period of major outflow seen back in 2011, when an Aussie mining boom attracted Kiwis across the ditch for the prospect of a six-figure salary."
While immigration numbers were expected to recover across 2023, the short-term impact was likely to dampen economic growth, said Kiwibank chief economist Jarrod Kerr.
"It is a headwind, particularly in the year we're having."
Kiwibank had a GDP growth forecast of just 3 per cent for 2022, which reflected reduced consumption as living costs and interest rates rise, Kerr said.
Last week ANZ downgraded its 2022 GDP forecast to just 2.1 per cent.
ANZ economists are also picking a net migration loss as borders open.
As well as potentially slowing economic growth the net loss of workers could exacerbate existing labour shortages which could add to inflation pressure, Kerr said.
"It is concerning because we're losing people from a tight labour market already, which means this next 12 months is going to be even more awkward," he said.
"We think it's a big issue."
Labour shortages were currently a global phenomenon, which meant there was no shortage of opportunities for skilled workers, Kerr said.
There was also likely to be pent-up demand for younger Kiwis looking to head off on their OE.
Normally Kiwis looked to Australia and the UK for those sorts of opportunities but even the US was battling with an extremely tight labour market, he said.
Local employers are already seeing growth squeezed by staffing shortages.
A New Zealand Institute of Economic Research (NZIER) report in December showed that 73 per cent of firms reported difficulty finding skilled workers, with 60 per cent saying they had difficulty finding unskilled workers.
Fifty-one per cent of manufacturers said a shortage of labour was the single factor most limiting their ability to increase turnover.
New Zealand citizens can now enter the country without the need to self-isolate. From the 12th of April our Australian mates can do the same – in addition to people on temporary work and student visas.
From May, visa-waiver countries will follow Australia. And by October, the border will fully open to all visa categories.
This roadmap was certainly welcomed by tourist operators and education providers, Kiwibank said.
The Government's roadmap was also subject to change and the planned opening of the border to Australians has already been brought forward.
Regardless it was likely to take some time for normal immigration levels to return, Kerr said.
In contrast to the departures, long-term arrivals would be held back by the gradual reopening of the border, Kiwibank said.
Prior to Covid, the top three sources of non-NZ arrivals were China, India, and South Africa. All three were non-visa-waiver countries.
"In fact, applying current visa-waiver settings to non-NZ migrant arrivals data shows that most arrivals pre-Covid came from non-waiver countries. The border will reopen to these countries from the December quarter," Kiwibank said.
From the December quarter Kiwibank sees long-term arrivals starting to meaningfully lift, and eventually lead net migration to return to an average of around 30,000 people per annum.
"That's higher than the long-term average, but well down from pre-Covid highs."
A net migration gain back at those levels would give the economy a boost.
"But we think that's a story for next year," Kerr said.
