As New Zealand's cost-of-living crisis worsens, economic refugees are leaving the country.

• In the face of high prices, high interest rates, and job insecurity, the New Zealand government predicts that a record 131,200 of its citizens have emigrated in the past year up to June.
• The economist predicts that the trend of young New Zealanders leaving the country due to a lack of quality jobs is likely to continue, accelerating the exodus.

Despite being known as a picturesque and progressive safe haven, New Zealand's weak economy has caused many of its citizens to leave the country.

In the face of high prices, high interest rates, and high unemployment, the government recently reported that 131,200 people left the country in the past 12 months through June, a record high. Of those, approximately 80,200 were citizens, which is nearly 70% higher compared to the year ended June 2019, before the pandemic.

Wilson Ong, a 32-year-old manager and buyer in New Zealand's fashion retail industry, plans to join his friends who have left.

"In New Zealand, job opportunities and work experience are limited, which is a key factor for me."

Many New Zealanders, or kiwis, have long sought experiences abroad, but strict Covid-19 lockdowns have delayed their travel plans.

One economist reports that millennial and Gen Z kiwis are increasingly dissatisfied with the economy, as Ong indicates.

In the year ended June 2024, over half of New Zealand's emigrants were aged between 20 and 39, with those aged 25 to 29 comprising the largest group, according to government statistics.

According to Shamubeel Eaqub, principal economist at the New Zealand Institute of Economic Research, the country's economy has been slowing down over the past year and a half, with job losses particularly affecting the youngest generations.

He stated that as long as the job market remains unfavorable, the economic refugees from New Zealand are unlikely to stop leaving.

Cost-of-living crisis

To eliminate Covid, the New Zealand government implemented strict lockdowns and a mandatory 14-day managed isolation facility for those arriving into the country early in the pandemic. Prior to enforcing managed isolation, then-Prime Minister Jacinda Ardern stated that over 40,000 kiwis had returned home between March 20, 2020, and April 9, 2020, which exceeded the total number of hotel rooms available across the country.

The country's quick response to the pandemic successfully eliminated the virus for extended periods, resulting in low mortality rates.

Ong had initially planned to relocate to England in 2020 but opted to remain in New Zealand due to the perceived safety of the country during the pandemic. As a result, he received wage subsidies during the Covid era and eventually returned to his job in Auckland.

Since the subsidies have dried up, many small businesses that closed during pandemic lockdowns never reopened. Meanwhile, persistently high inflation has reduced the purchasing power of the country's roughly 5 million consumers.

In the June quarter 2022, New Zealand's annual inflation rate reached 7.3%, its highest level in over three decades. Despite cooling to 3.3% in the June quarter 2024, it remains above the Reserve Bank of New Zealand's medium-term target range of between 1% and 3%.

Despite data from CoreLogic showing that rents and mortgages compared to salary remained high, the country's housing affordability remained worse than long-term averages.

Despite the country's economy fluctuating between recession and recovery, Ong observed that wages in his industry remained unchanged, leaving him feeling economically disadvantaged compared to pre-pandemic times.

According to Ong, who is currently job hunting in multiple countries, a characteristic of a poor economy is the absence of chances to increase your wages in relation to the cost of living.

In the past three years, the share of income required for mortgage payments has fluctuated between 53% and 57%, according to CoreLogic NZ Chief Property Economist Kelvin Davidson, who stated this in August.

During the global financial crisis in 2007-2008, only 50% or more of income was used for mortgage payments in six quarters.

Low wages

New Zealand's most common destination for emigrants is neighboring Australia, according to data.

Not only does the economy thrive in Australia, but the Australian government simplifies the process for New Zealanders to relocate there under a special visa. Effective July 2023, New Zealand citizens who have resided in Australia for at least four years can apply directly for citizenship.

The Australian government has advertised for kiwi workers in the public sector, offering "warmer days and higher pays" in recent months, as reported by local media.

According to a recent salary guide from recruitment company Hays, roles in various industries in Australia are paying significantly more than in New Zealand.

In Sydney, a construction foreman could earn more than 60% compared to Auckland.

Worse before it gets better

Eaqub believes that despite increasing concerns about brain drain and a shortage of skilled workers, New Zealand has limited options to enhance its economic situation in the near future.

He stated that he believes the economy will deteriorate before it improves, citing several post-Covid policy decisions in New Zealand, including high interest rates, as factors limiting consumer and business spending.

Although the Reserve Bank of New Zealand reduced interest rates by 25 basis points last month, Eaqub believes that the economy will not start to recover until 2025.

In October 2020, the nation experienced a political shift to the right, with the election of a highly conservative government.

The National Party, a center-right party, reversed the progressive policies implemented by Ardern's Labour government, which earned the country significant social cachet among liberals worldwide.

In addition to national enforcing widespread staffing cuts in the public sector to save money, there were reductions in capital expenditure and investment in the private sector.

As a result of austerity, the economy has been hit hard, according to Eaqub.

—CNBC's Christina Zhao contributed to this report.