Latest / Early Edition with Ryan Bridge / Mark Smith: ASB Senior Economist on the international tourism figures remaining below pre-Covid levels

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Mark Smith: ASB Senior Economist on the international tourism figures remaining below pre-Covid levels · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Tourism numbers are out, it's not good news for the sector.
• 0:03
  Speaker 1: As we head into summer, we're still only hitting eighty
• 0:06
  Speaker 1: seven percent of our pre COVID numbers. It's more of
• 0:10
  Speaker 1: a merit than an excellence on an NCAA exam. You'd
• 0:12
  Speaker 1: have to say. Migration is also declining as a record
• 0:16
  Speaker 1: number of kiwis leave most of them to Australia. It's
• 0:18
  Speaker 1: net positive for now but reducing each month. So could
• 0:21
  Speaker 1: we be on the way to net zero migration next year?
• 0:25
  Speaker 1: And what does it mean? Mark Smiths, the ASP senior economists, Mark,
• 0:28
  Speaker 1: good morning.
• 0:29
  Speaker 2: Good morning, good to hear from you.
• 0:31
  Speaker 1: Should we be worried about this? It's a pretty stubborn
• 0:35
  Speaker 1: pre COVID number on MIGRA on tourism.
• 0:39
  Speaker 2: Yeah, that's right, and sims of the shortfall if you
• 0:43
  Speaker 2: put it that way, it's three. We're board based by
• 0:45
  Speaker 2: different markets, particularly Europe about thirty percent below pre COVID levels,
• 0:50
  Speaker 2: China about forty five and for the rest of Asia
• 0:53
  Speaker 2: about thirty percent as well. So it is a reasonabor
• 0:56
  Speaker 2: based reason for that. Now looking at probably the reasons, one,
• 1:02
  Speaker 2: the global economy is still of recovering from COVID, so
• 1:05
  Speaker 2: it will take some time. Two. New Zealand's are pretty
• 1:08
  Speaker 2: periphul destination for tourism the best of times, and we're
• 1:11
  Speaker 2: very small, only about two point two percent of global tourism.
• 1:15
  Speaker 2: Probably the most important reason, I think is that cost
• 1:18
  Speaker 2: remains stubbornly high for people getting to New Zealand. For
• 1:21
  Speaker 2: long away New Zealand's are recently high cost destination, and
• 1:25
  Speaker 2: airfares are still very high as well.
• 1:28
  Speaker 1: So it's not us, it's them. Basically, they're in the
• 1:30
  Speaker 1: cost of living crisis too, and we're far away. It's
• 1:33
  Speaker 1: not that we've gotten ugly orly shining during COVID.
• 1:37
  Speaker 2: Well I'm not so sure about that, And I mean
• 1:40
  Speaker 2: there are things you can do to make sure that
• 1:42
  Speaker 2: you're a lot more attractive destination. Arguably, we'll probably have
• 1:46
  Speaker 2: some work to do as well.
• 1:47
  Speaker 1: Yeah, and when we are slapping on a tourist tax too,
• 1:49
  Speaker 1: which has yet to be felt. Let's talk about the
• 1:52
  Speaker 1: other elephant in the room, and that's migration. What happens
• 1:55
  Speaker 1: if we hit net zero next year? What does that
• 1:57
  Speaker 1: mean for us?
• 2:00
  Speaker 2: Well, yeah, migration. If you like, as a viewer, I
• 2:03
  Speaker 2: suppose again, of how attractive you are, we've gone from amparible.
• 2:07
  Speaker 2: We're sort of at the head of the dirty stakes.
• 2:10
  Speaker 2: Very attractive now to locking at potentially net outflows next year.
• 2:14
  Speaker 2: Now that's really a reflection of where the New Zealand
• 2:17
  Speaker 2: economy is relevant to the rest of the world, and
• 2:19
  Speaker 2: at the moment we're weaker and those migration flows are falling. Now,
• 2:23
  Speaker 2: migration is the difference between two very big numbers, and
• 2:26
  Speaker 2: it's certainly possible we could see net outflows for next
• 2:29
  Speaker 2: year as well.
• 2:30
  Speaker 1: Next year and is that really bad? I mean, what
• 2:33
  Speaker 1: does it do to our GDP? Obviously it'd be good
• 2:36
  Speaker 1: for presumably for demand on resources like hospitals, et cetera.
• 2:39
  Speaker 1: But what does it do to our growth?
• 2:42
  Speaker 2: Yeah, I mean that's a good point. A lot of
• 2:44
  Speaker 2: the things, a lot of the resource utilization will ease,
• 2:47
  Speaker 2: so things like congestion, hospitalization that that will be easier.
• 2:52
  Speaker 2: The other side of the corner will be demanded, and
• 2:54
  Speaker 2: the economy will be a weaker. The housing market for example,
• 2:57
  Speaker 2: will be a weaker as well, less demand for housing
• 3:00
  Speaker 2: and potentially things like the labor market. Migration has been
• 3:04
  Speaker 2: a huge factor enable mu Zium to revise, you know,
• 3:08
  Speaker 2: enough staff for certain roles that might also be an issue.
• 3:11
  Speaker 1: What's what's our projection for GDP for next year in
• 3:15
  Speaker 1: the following.
• 3:17
  Speaker 2: Essentially it's been flat, well has a year or two.
• 3:21
  Speaker 2: We might see a bit of a rebound sort of
• 3:24
  Speaker 2: second half of next year and that should hope the
• 3:26
  Speaker 2: ten around migration flows. But again it's still quite a
• 3:30
  Speaker 2: long way ahead and it's still quite of uncertainly, but
• 3:33
  Speaker 2: hopefully we're past the sort of trif of the cycle
• 3:37
  Speaker 2: and we should start to improve by the d of
• 3:39
  Speaker 2: next year.
• 3:40
  Speaker 1: You'd hope. So Australia is looking at one point two
• 3:43
  Speaker 1: percent for twenty five and one point nine percent for
• 3:45
  Speaker 1: twenty six, so we're going to try and beat them some.
• 3:47
  Speaker 1: Statched up with Mark, Thank you very much, Mark Smith,
• 3:50
  Speaker 1: asb Senior economist on those two new numbers, one tourism,
• 3:53
  Speaker 1: the other migration.
• 3:55
  Speaker 2: For more from early edition with Ryan Bridge.
• 3:57
  Speaker 1: Listen live to News Talks it'd be from ive am weekdays,
• 4:01
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