People power

Recent developments have highlighted the strength in economic conditions through the first half of the year. We expect that economic growth will continue ticking along at around 3% per annum for the next few years. However, the drivers of growth will shift over time.

Rapid population growth and record tourist inflows have provided a powerful boost to demand in the economy over the past few years. And it looks like these factors will continue to support demand for some time yet.

Looking first at population growth, net migration did ease back a little in April with a monthly inflow of 5,800. However, that's still very strong, and the annual inflow of 71,900 people is just shy of the record high reached in March. Strength in net migration has seen our demand base continue to expand, with population growth rising to more than 2% per annum. That's some of the fastest growth we've seen since the 1970s, and a rapid pace for any developed economy. We expect net migration will remain firm for some time yet, though it does look like the annual inflow has reached a plateau.

Looking to the next couple of years, we expect net migration will start to ease off as the global economy improves and more New Zealanders start to look at moving offshore. Nevertheless, this eventual easing in migration looks like it will be quite gradual.

Download The Full Weekly Commentary