New Zealand faces record youth exodus as cost of living crisis worsens
New Zealand is experiencing an unprecedented wave of migration, with thousands of citizens leaving the country in search of better opportunities abroad.
Rising living costs, limited job prospects, and a “grim” economic atmosphere are some of the key reasons behind this exodus.
According to Statistics New Zealand, 131,200 people left the country in the year to June 2024, marking the highest number on record.
Of these, 80,200 were New Zealand citizens, nearly double the annual departures before the COVID-19 pandemic, with a significant proportion aged between 18 and 30.
Economic pressures push New Zealanders abroad
New Zealand’s economic struggles have been significant in recent years. Despite returning to growth with a modest 0.2% quarterly expansion in June 2024, the country faces persistent challenges.
Unemployment reached 4.6% in the June quarter, up from 3.6% in the same period in 2023. Wage growth, although ahead of inflation, slowed to 4.1% from 4.3% the previous year.
This economic backdrop has pushed many young New Zealanders to seek better opportunities elsewhere, particularly in Australia.
Rising house prices and high inflation
For many young New Zealanders, owning a home remains a distant dream. After years of declines, house prices are rising again and are roughly seven times higher than the average income, according to Infometrics.
Overall inflation peaked at 7.3% in 2022, one of the highest rates in the developed world, and remains above the central bank’s target at 3.3%.
In response, the Reserve Bank of New Zealand implemented several interest rate hikes, peaking at 5.5%. Although necessary, these measures have made the economic climate difficult for many citizens.
Labour government replaced amid economic discontent
Economic dissatisfaction culminated in October 2023, when New Zealand voters replaced the progressive Labour-led government with a cost-cutting conservative coalition led by the National Party.
The new government, headed by former airline executive Christopher Luxon, has focused on economic recovery.
Following a recent 0.25% interest rate cut by the Reserve Bank, Finance Minister Nicola Willis expressed optimism that the economy is “back on track” after years of soaring prices.
For many, this optimism comes too late, as disillusioned citizens continue to leave in search of better prospects.
Australia becomes top destination for New Zealand migrants
Australia has emerged as the top destination for New Zealanders seeking to escape the economic challenges back home. In 2023 alone, 44,500 New Zealanders relocated to Australia, according to Statistics New Zealand.
The scale of this outflow is particularly concerning to economists who believe it signals a more permanent shift than the traditional “overseas experience.”
Brad Olsen, principal economist at Infometrics, noted that this trend suggests “wider moves afoot,” as many New Zealanders view Australia as offering better opportunities.
Can New Zealand retain its skilled workforce?
The current migration trend could have long-term consequences for New Zealand’s population and innovation potential.
Historically, many New Zealanders who moved abroad returned home after a few years to be close to family. Economic uncertainties and high living costs may challenge this pattern.
Economists like Olsen warn that the combination of higher outflows and weaker pull factors could pose a significant risk to New Zealand’s future population and innovation levels.
New Zealand is at a crossroads, facing an urgent need for policies that address the economic concerns driving its citizens away.
The government must focus on creating affordable housing, reducing inflation, and fostering job growth to retain its young, talented population.
Without significant changes, the current exodus could turn into a permanent loss, affecting the country’s long-term economic health and innovation capacity.
The post New Zealand faces record youth exodus as cost of living crisis worsens appeared first on Invezz
