Downside risks to NZ’s growth outlook accumulate

New Zealand’s provincial economies are poised to drive growth in the economy, building on the recovery in dairy prices during 2016, according to Infometrics latest economic forecasts. Spending activity in the regions is comfortably outpacing activity in the main centres, with commodity prices for most exports holding at high levels.

Media Release: Provincial New Zealand dominates economic growth prospects

New Zealand’s provincial economies are poised to drive growth in the economy, building on the recovery in dairy prices during 2016, according to Infometrics latest economic forecasts. Spending activity in the regions is comfortably outpacing activity in the main centres, with commodity prices for most exports holding at high levels.

Where can we find more skilled workers?

We have heard a lot recently about the struggles to meet labour demand in the regions . With a tight labour market and low unemployment rate, stories of employers being unable to find enough workers are becoming increasingly common. This article looks at immigration, one of the key ‘cogs’ to helping address skills shortages. More specifically, we look at how the proposed ‘Regional Skills Shortage List’ could provide the necessary workers throughout the country.

Getting down to business, or getting businesses down?

We have revised down our expectations for GDP growth during 2018 in our latest economic forecasts (see Graph 1). Our previous forecasts, in October, were upbeat about prospects for the New Zealand economy this year, but a range of factors have combined to see that growth outlook soften over the last few months. These factors include persistent capacity constraints in the construction sector, changes in central government’s infrastructure priorities, and dairy prices that have been a bit disappointing.

Why are our car forecasts so much higher than last time?

We have revised up our car sales forecasts considerably over the five-year forecast period when compared to our February outlook. A big part of this long-term lift is a change in our forecasts for net migration. But there are also factors, such as high ownership rates and an improving economy, which are also going to push up demand for vehicles throughout our five-year forecast period.

Are we under-measuring our migrant numbers?

New data from Statistics NZ shows that migration, as we currently track it, is not always representative of true long-term migration. Using this information, we know that net migration in 2003 was severely underestimated. Given current labour market conditions and the attraction for both foreigners and returning New Zealanders to stick around, we believe that long-term net migration could currently be underestimated by 4,000-8,000 people.

Long-term implications of high net migration

New Zealand has gained around 72,000 more people in the past year according to arrival card data, and we’re feeling the strain of squeezing all these extra people into our cities.  But further analysis of visa data suggests that there are longer-term implications for these high arrival levels that, if left unchecked, could pose a problem for policymakers when we come off the high point in the business cycle.

Will government rule changes have a big effect on visa approvals?

The government has been successively tightening the rules for resident visas since October 2016. The purpose of these rule changes ostensibly is to reduce the number of people moving to New Zealand while not cutting off the supply of workers for our overstretched labour market. But each set of rule changes will have very different effects for migrants on work and resident visas. In this article, we outline the rule changes and discuss the implications of these changes for migration numbers and industry stakeholders.