NZ: Unclear migration policy results in uncertain outlook - ANZ

New Zealand’s migration inflows have been very strong in recent years and this has been a key driver of the economic cycle, according to analysts at ANZ.

Key Quotes

“In a broad sense, the impacts of strong population growth have been predictable: it has boosted demand and put pressure on housing and infrastructure. But the effects have been subtly different to previous cycles, in that we have seen less resulting inflation pressure.”

“As well as the general backdrop of subdued inflation, we put this down to two specific factors. First, the demographic mix of net migration has led to a solid boost to labour supply, and the pool of potential workers has effectively been larger. And second, headwinds for the housing market have of late outweighed the migration impact.”

“Going forward, the outlook is uncertain. The migration policy outlook is unclear, and even if one could predict migration, the different dynamics this cycle mean the impact is subject to uncertainty.”