External Migration - February 2002

We have just published the following research.

External Migration - February 2002

Result: A further strong net inflow of migrants was recorded in February but
tourist arrivals eased back a little.

Implication for markets: Migrant flows are tracking in line with RBNZ
projections. We expect the RBNZ to hike the OCR by 25bps at both the April and
May meeting.

Commentary

Migration data for the first two months of this year is consistent with the
RBNZ's assumption that the annual net inflow will increase to around 30,000
people over the course of 2002. The positive impact of this inflow on the
demand for housing and consumer durables, with consequent flow-on impacts on
inflation, is one of the key factors underpinning the Bank's decision to begin
an early retightening of monetary conditions. In common with the RBNZ, we
expect the next inflow to begin easing before long, in part reflecting the
improving outlook for the global economy.

After declining sharply post-11 September, tourist arrivals rebounded somewhat
in December and January. The improving trend suffered a minor setback in
February, with arrivals again declining to levels well below those prevailing
prior to the terrorist attacks. However, the bulk of anecdotal evidence
continues to suggest that the improving trend should reassert itself over
coming months. In our view, the tourism sector is set to resume its position as
one of the key drivers of New Zealand's economic growth.

Key points

Adjusting for seasonal effects, a net 3,020 people migrated to New Zealand in
February, taking the annual inflow to 21,992. This compares with an annual
outflow of 13,214 in the preceding year. To put this in perspective, the
turnaround in migrant flows over the past year is equivalent to 0.9% of the
country's population.

The number of tourist arrivals fell 4.6% in February but was still 6.1 % higher
than a year earlier. Arrivals in November had been 9.9% lower than a year
earlier. The decline in February occurred despite a strong increase in arrivals
from Asia (possibly reflecting the timing of the Chinese New Year holidays) and
was due to a decline in arrivals from the US following a strong result in
January.

The number of short-term departures by New Zealand residents rose 0.4% in
February but was 9.1% lower than a year earlier.

This, along with an extensive range of other publications, is available on our
web site http://research.gm.db.com

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