Fewer migrants coming to NZ

By BRIAN FALLOW economics editor

The net inflow of immigrants fell last month, a sign that one of the main propellants of economic growth may be weakening.

Adjusted for seasonal effects, the net gain of permanent and long-term migrants was 3100, Statistics New Zealand said, down from 3700 in May, reflecting both a drop in immigration and an increase in emigration.

It is the weakest inflow this year and below the monthly average of 3500 over the past year.

Deutsche Bank economist Darren Gibbs said that in recent months arrivals from Asia had moderated, partially offset by more from Europe.

"At this stage it is not clear whether the Sars virus has delayed the arrival of prospective long-term migrants from Asia but this seems to be a strong possibility given the very sharp fall in tourist arrivals from the region.

"If so, arrivals from Asia should rebound over the coming months."

In the year ended June the net gain was 42,500.

At that rate net migration is boosting the population by around 1.1 per cent, compared with a 0.7 per cent contribution from natural increase.

The annual increase was unchanged from May and in line with the previous five months.

But the annual growth rate has fallen sharply, another sign that a turning point has been passed; the latest annual net gain of 42,500 was 30 per cent up on the previous June year, but February's annual net gain of 41,600 represented a 60 per cent increase on the year before.

Westpac economists believe the annual tally will drop to the 20,000 to 25,000 range by the end of the year, and the economic boost from migration will moderate accordingly.

They point to changes to the entry criteria for immigrants, tougher competition for foreign students, and the prospects that improving world growth will encourage more New Zealanders to try their luck overseas.

At the moment there is backlog of applications for 46,000 people under the general skills category, which is to be scrapped.

Immigration Minister Lianne Dalziel said this month that about half of those applicants would fail to meet new entry criteria.

Westpac, in a quarterly economic overview, said that the last time migration rules were tightened the response was fairly quick, turning the inflow of foreign migrants from a peak of around 46,000 in June 1996 back to pre-influx levels of around 24,000 by early 1998.

"Exponential growth in foreign students looks likely to be over as well," Westpac said.