New Zealand is facing a serious demographic crisis as its population is on the decline due to ongoing economic challenges. Recent government statistics bring to the fore a concerning trend of citizens leaving the country in record numbers. This is driven by a combination of economic factors and better opportunities abroad.
Unprecedented Exodus
The government statistics bureau reported that 131,200 people left the country in the year till June 2024, marking a record number of departures for one year. Of these, 80,174 were New Zealand citizens, almost twice the level before the COVID-19 pandemic hit. High living costs, soaring interest rates and declining job opportunities at home restricted so many people from working there that they had no choice other than to emigrate.
The country’s economy also is grappling with challenges. Annual growth accounted for only 0.2% in the first quarter while unemployment rose to 4.7%. Inflation remains high at 3.3% and the central bank has implemented aggressive money tightening, hiking cash rates since 1999.
Under these circumstances it is not difficult to understand why people are going to neighbouring Australia, which has a low tariff for citizens living in New Zealand and actively recruits in sectors facing skill shortages. The possibility of applying for a job in Australia without any visa further enhances its appeal to the Kiwis.
Government Response
To counter these reasons, starting from October 1, 2024, New Zealand will implement changes in its visa fees and immigration policies. Among other things, it will also increase student visa charges for most applications and will make adjustments in work visa fees and levies. The strategic task now facing the government is to develop the New Zealand economy in a way that also keeps the island nation inhabitants and attracts highly skilled foreigners. By striking such a balance, population decline will slow down and the very future of the economy can be made secure.
Long-term Implications and Outlook
With New Zealand’s population continuing to decline, the country faces long-term strategic challenges. The impending loss of skilled workers could lead to loss of labour in critical sectors impacting economic growth and productivity.
In addition, a dwindling population could add pressure on public services and infrastructure planning. The latest statistics show that the number of entrants to New Zealand has dropped to its lowest 16- month level, with annual net immigration reduced in June to 73,270 from May’s 83,740. At this point it was the weakest in 16 months. It was also the lowest since February 2023.
Over the next few months and years as New Zealand confronts the implications of these demographic and economic shifts, success in dealing with these challenges will be crucial to shaping its future demography and economic prosperity.
