Liam Dann: Returning Kiwis – wave or ripple?


There are a lot of variables making it very hard to pick the strength of the New Zealand economy over the next year or so.

One of the biggest is population growth – or lack of it.

Will closed borders cause the economy to slump harder in coming months? Or is there a wave of expat refugees on its way from around the pandemic-ravaged world?

How this plays out has huge implications for everything from our labour market to our housing market and our infrastructure plans.

In the five years to the start of the Covid pandemic, New Zealand experienced the biggest wave of migration in its history.

We had an average annual net inflow of between 50,000 and 60,000 people, which helped the population surge past five million this year.

There’s no doubt it had a huge impact on the country.

New immigrants bolstered GDP, created jobs and filled labour shortages.

But as the population rose we saw pressure going on infrastructure and the cost of housing.

Then Covid came and the borders closed with a resounding thump.

The obvious assumption was that we’d see the economy hit hard and house prices would fall.

But house prices have risen and the parts of the economy not related to tourism have stayed relatively strong.

One explanation is super-low interest rates and baby boomers with money to burn.

But there has also been anecdotal evidence that returning Kiwis – in particular wealthy professionals – are active in the property market.

Last week we saw a survey from KEA (the Kiwi Expats Association) which indicated that as many as half of New Zealanders living abroad were keen to head home – and about a quarter within the next two years.

While the survey polled 15,000 people, that trend extrapolated to the wider pool of one million Kiwis (estimated to be living of abroad) suggests we might expect 250,000 returnees in the next two years.

But then we got a reality check on the idea that we’re already seeing a wave of returnees.

New numbers from Stats NZ showed the long-term arrivals of citizens between April and September is actually about half what it is usually.

It might feel like a lot of Kiwis are coming home because they are so much more visible.

Quarantine requirements put them in the headlines and they stand out more with no international migrants coming in around them.

Economists were sceptical about the KEA findings.

The much bigger story now, and for as long as borders remain closed, is that far fewer people will be crossing our border in either direction, said Westpac chief economist Dominick Stephens.

Still, it’s worth remembering that population growth is about two-way traffic.

The fact that almost no one is leaving is keeping our net migration numbers in the positive territory – albeit at much lower levels (about 2500 in the six months from April to September).

That’s actually still pretty solid relative to some other recessionary periods in our history where we have seen a wave of departures and significant population loss.

For the record, the Reserve Bank, which has crunched its own numbers, reckons we probably had an additional 100,000 people within our borders this year relative to last year.

That’s due largely to the lack of the departures and the fact that the pandemic started just after the boom period for international tourists.

They expect that this year-on-year comparison will reverse through the summer months because of the lack of tourists.

Meanwhile, will Kiwis really come home in large numbers when the logistics of quarantine allow?

The survey result was really strong.

But it is also not hard to imagine that many Kiwis in pandemic-ravaged places like the UK and US are feeling very homesick right now and that influenced their responses.

If the vaccine arrives and the weight of the pandemic lifts then they may change their minds.

I think the KEA survey is interesting in so far as it highlights incredible potential to tap into a network of high-skilled expats.

There is clearly an opportunity to get some very talented Kiwis back into the country.

It may be that those who have already arrived this year represent a different mix to usual.

Perhaps they are older, more successful and quicker to get into our property market.

We don’t really have data on that.

If that is the case – as KEA thinks it is – it will have a marked effect on our economy.

One thing everyone agrees on, though, is that we lack enough detailed information about the Kiwi arrivals.

They are citizens so don’t have to fill out the paperwork required of foreign migrants.

But, as Infometrics economist Brad Olsen points out, they are sitting around in quarantine for two weeks, so asking them to voluntarily fill out a survey about their skills, employment and accommodation plans might not be a bad idea.

The KEA survey was the first of its kind and will be more useful if it is repeated and we can start to see a trend.

The fact that New Zealand remains a highly desirable place to work and live is an enormous economic advantage.

We just need to be sure we keep track of the demand to come here and have a good understanding of who is coming.

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