New Zealand’s slow population growth hampers economic recovery
Gross domestic product has contracted in three of the last five quarters to June
[WELLINGTON] New Zealand’s population is growing at the slowest pace in nearly 13 years, excluding the pandemic, further hampering its sluggish economic recovery.
The estimated population grew by 0.6 per cent in the 12 months to September, reaching 5.33 million, Statistics New Zealand said on Monday (Nov 17) in Wellington. That’s the weakest annual expansion since the fourth quarter of 2012, excluding a period in 2021 and 2022 when the border was closed to most foreigners during the Covid-19 lockdown.
New Zealand’s economy has historically relied on population growth to stoke domestic demand because productivity or output per worker is weaker than that of many comparable developed nations. Foreign workers also traditionally fill missing skills gaps across a number of industries and provide labour for major infrastructure projects.
But demand for migrant workers has waned after economic growth stalled and unemployment rose. Gross domestic product has contracted in three of the last five quarters to June, and economists expect only a modest expansion in the third quarter. At the same time, more citizens have opted to look overseas for job opportunities and higher pay.
“Migration is well below long-term averages and remains a handbrake on the economic recovery,” said Wesley Tanuvasa, an economist at ASB Bank in Auckland. “Slow population growth from weak net migration constrains demand, particularly in retail and housing.”
The exodus of citizens has become a pressure point for Prime Minister Christopher Luxon, who argues his centre-right government is a better economic manager than the opposition but has yet to convince voters. His party has trailed in recent polls and an election is due in late 2026.
Today’s report showed population growth of 32,900 in the 12-month period, comprising net immigration of 12,400 and 20,500 more births than deaths. BLOOMBERG
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