Ethnic communities generate a third of Auckland’s GDP

The contribution of ethnic communities to Auckland's economy has grown rapidly, reaching one-third of the city's GDP in 2023.

In a report published today, New Zealanders who traced their origin to Asia, Europe, the Middle East, Latin America and Africa - making up 42 percent of Auckland's population - contributed $50 billion to the local economy in 2023.

The findings have been complied by economists Shamubeel Eaqub and Nihal Sohanpal in the report commissioned by the Waitākere Ethnic Board, New Zealand Government's Auckland Policy Office, Ministry of Ethnic Communities and the Ministry of Business, Innovation and Employment.

It follows a similar report published in November last year that examined the ethnic communities' contribution to New Zealand's broader economy.

The report revealed ethnic businesses contributed $87 billion to New Zealand's GDP in 2023.

The 2023 contribution, which increased from $64 billion in 2021, comprised 22 percent of the country's GDP that year.

Getting back to Auckland, the government's Auckland Policy Office published a report in June 2022 that found ethnic communities contributed $33 billion, or around 30 percent, of the city's total GDP in 2018. These communities made up 37 percent of Auckland's total population at that time.

The 2023 Census data pushed that contribution to $50 billion and the population share to 42 percent.

Gurdeep Talwar, president of Waitākere Ethnic Board, said many ethnic businesses maintained global connections across a wide range of sectors.

"This growth reflects the strong participation of ethnic communities across entrepreneurship, employment, innovation and international trade," Talwar said.

Throwing light on reasons for the sharply rising contribution of ethnic communities, the authors of the report highlighted their high employment and participation rates - exceeding or matching Auckland averages.

"Auckland's ethnic mix continues to change quickly. Asian communities are the fastest growing, with Indian and Chinese groups now approaching the size of Māori population," the report said.

"These communities are also significantly younger and in family formation ages, meaning they make up a rising share of Auckland's prime working-age population and future workforce.

"They contribute across a wide range of industries, including hospitality, healthcare, information and communication technology, business services and logistics."

Talwar, meanwhile, noted that structural barriers persisted.

"The report also shows that there is still significant unrealised economic potential within ethnic communities," Talwar said.

According to the report, while ethnic communities were more likely to hold tertiary qualifications, these didn't necessarily translate into equivalent earnings.

"These represents a large unrealised economic opportunity for Auckland," the report said.

"Many communities begin in industries with low barriers to entry (food services, cleaning, transport) and gradually diversify into construction, healthcare and technical services.

"[But] entrepreneurship rates remain below average overall, and limited access to capital, networks and market information continues to slow growth."

However, the authors of the report remained hopeful.

"There is an encouraging trend of convergence," the authors said.

"That is, the GDP gap between ethnic minority communities and Pākehā is gradually closing over time. This is a gap in GDP contribution compared to the relative ethnic minorities' population size.

"If the current gap closed, it would lift Auckland's GDP by $23 billion or 15 percent. This would be equivalent to the current size of the finance and real estate sectors in Auckland added together."

The authors also proposed solutions for realising this untapped potential.

"Delivering on this potential requires recognising overseas qualifications more effectively, increasing leadership and management pathways, supporting entrepreneurship with targeted capital and network access, strengthening inclusive hiring and reducing discrimination, as well as investing in acculturation as a two-way process," they said.

"Ethnic minority communities are driving Auckland's growth. They bring skills, energy and ambition.

"The economic gains already visible are substantial, but the unrealised potential is even greater.

"With deliberate action, Auckland can unlock this potential and move toward a more productive, more inclusive and more prosperous future for all."