Specifically, I mean the flow of humans across our border.
We are a very small country, with a total population the size of Sydney.
So, whether it’s tourists or immigrants, the fluctuations in the number of people leaving and entering the country have an outsized impact.
When the numbers fall dramatically, as they have done, we feel it acutely.
There is a human-shaped hole in our economic recovery.
We had more good news out of the primary sector last week.
A Government report forecast primary sector export earnings will hit $59.9 billion in the June 2025 year – $3b higher than was projected in December.
That’s a big stimulatory boost on top of already strong earnings.
But we had more bad news out of the retail sector.
Electronic card transaction data for May showed consumers are still feeling cautious.
We should have had more money in our pockets thanks to lower petrol prices and lower interest rates.
But core spending (which excludes fuel) was down 0.2% in May, with falls for durables and consumer goods. Hospitality and apparel were basically flat, up just 0.1%.
There really aren’t any obvious signs of recovery there for the beleaguered Auckland CBD.
It’s a tale of two economies, and there’s a big divide opening up.
It would be interesting to compare and contrast the vibe at Fieldays this weekend with that on Queen St.
Last week, we also saw the release of new immigration and tourism data.
These provided a timely reminder of what the missing pieces of this economic recovery are.
Our annual net migration gain dipped to just 21,300. That’s still population growth and I suppose we should be thankful for it.
However, if we put aside the Covid years when the borders were closed, it is the country’s lowest rate of population growth since January 2014.
Back then, things were building up again after a post-GFC exodus.
Since then, our economy has grown used to running with high levels of net migration gain. From 2015, it ran between 50,000 and 70,000, which everyone thought was pretty wild at the time.
But after we opened the borders post-Covid, things really took off.
New Zealand’s net migration gain soared to a record peak of 138,000 in the year to October 2023.
It pushed the economy to the limits of its ability to cope.
But it also meant unprecedented demand for housing, cars, furnishings and all sorts of other retail goods.
Every new immigrant has to live somewhere. Most drive cars.
So the big fall in numbers – a combination of fewer arrivals and record departures – puts a huge dent in demand relative to where the economy has become used to operating.
Then there is tourism.
New Zealand had about 3.6 million overseas visitors in the year to April.
That’s a big number relative to our population and illustrates just how important tourism is to the economy.
But it should be much bigger. Stats NZ points out that the visitors in April 2025 represent just 86% of the total we got in April 2019.
Not only have we not yet returned to pre-Covid levels, but the current trend suggests we aren’t about to any time soon.
The tourist spending deficit looks even worse for our economy if we assume that, without the big Covid break, we might have achieved some degree of growth in the past five years or so.
What can we do to address this human-shaped hole in the economy?
Clearly, the Government is well aware of the problem. We saw two new policies unveiled last week to try to shift the dial.
On the tourism front, it was back to the future with the $5.5 million reboot of the “100% Pure” marketing campaign around the world.
That successful slogan was ditched in 2022 for “If You Seek”, which doesn’t seem to have made much impact.
That change is unlikely to shift the dial massively. The big issue with tourist numbers right now is the drop-off in Chinese visitors. The consumer end of the Chinese economy has been struggling too, and New Zealand is an expensive place to visit.
Prime Minister Christopher Luxon will be hoping he can drum up some renewed hype about New Zealand when he visits China late this month.
Based on our relationship with China though, and the surge in tourist interest after the free trade deal in 2008, the real key to a renewed tourist boom likely lies with India and the publicity a free trade deal there might bring.
On the immigration front, the Government has introduced a new Parent Boost policy, which will enable the parents of immigrants to stay for up to 10 years.
That should add to the appeal of New Zealand for many migrants.
But the reality is most immigration is driven by economic factors.
Immigrant numbers are unlikely to pick up until our job market does, which means we can’t rely on it to drive growth in the short term.
It’s probably good for our economy to sweat it out with lower than average net migration for a while.
House prices are balancing out, and this provides a chance for infrastructure planning and building to catch up.
But we need to turn the trend around soon.
We especially need to stop the youngest and brightest Kiwi workers from departing in high numbers.
The boom and bust cycles we seem to perpetually swing through are no good for long-term stability.
The goal of this Government and the next should be to encourage a steady pace of population growth, perhaps in the range of 30,000-40,000 net gain per year.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
