New Zealand's hot migration risks fanning inflation, forcing rates even higher | Business

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Gastroenterologist Wesley Kasen arrived in Hawke’s Bay New Zealand in February with his wife Marnie, two kids and dog from Colorado. Their arrival filled a vacancy at the local hospital. | News24_Business

The Kasens are part of a migrant boom helping to ease the country's acute labour shortages - a relief for firms desperate to fill vacancies and keep a lid on wages but which economists warn risks fanning inflation and keeping rates higher for longer.

However, it may not be so easy for the Reserve Bank of New Zealand, which has noted that rising long-term net migration could boost activity and inflation, with surging migration inflows highlighted in robust labour market data this week. A net 51,955 migrants settled in New Zealand in the year ended February, according to Statistics New Zealand. ANZ and Westpac economists say total net arrivals could hit a record 100,000 this year if current trends persist.New Zealand's inflation is running at an annual 6.7% rate, off a three-decade 7.

Kiwibank's Kerr noted there were already signs of weakness in the economy to hopefully keep pushing inflation lower. Economic growth contracted 0.6% in the fourth quarter.New Zealand is desperate for migrants to fill jobs for everything from driving buses to programming computer games but like Australia and Singapore, which are also trying to attract new migrants, the country faces a systemic housing shortage.

NZBus, one of the country’s biggest public bus operators, is a case in point. It is currently training 72 Fijian and Filipino bus drivers.

 

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