Immigration to stimulate Aussie economy

Oksana Patron

26 July 2023

The new wave of immigration, which is expected to exceed 700,000 people over the next two years, will stimulate the Australian economy with sectors such as education, housing, retail and healthcare benefitting the most from new immigrants’ consumption patterns, according to Datt Capital.

Emanuel Datt, chief investment officer Datt Capital, said that the new wave of immigration would help to counter the impact of the excessive inflation had on the market valuations of small caps.

“We will be watching closely the small cap sector to weight which companies are positioned to beat inflationary pressures and to undertake these new growth opportunities,” he added.

According to the Australian Migration Council, migration was viewed as central to Australia’s future prosperity, with a projected population growth to 38 million by 2050 and an overall contribution to the country’s GDP of $1.6 trillion.

Datt said that the consequences would be felt in every aspect of the economy and there were several reasons which allowed to believe why immigration would boost Australian companies.

“A new wave of immigration would boost the economy and real wages, even though it is likely to stoke inflation,” he said.

“Data shows that that migrants contribute disproportionately to new business formation, innovation, and job creation. Today with the economy at full employment, exposing skills gaps, companies are calling for a higher number of permanent migrants.

“New immigrants expect a similar quality of life to the average Australian and accordingly increase their consumption habits over time. In addition, new immigrants are generally younger than the average Australian, thereby improving the overall demographic composition of society.

“In this scenario sectors like education, housing, retail and healthcare will benefit from more consumption patterns shown by new immigrants.”