Canada's economic and demographic growth has been closely associated with the influx of permanent residents in recent years. However, a new study by Desjardins suggests that the significance of temporary migration on Canada's national economy is often underestimated. Economist Marc Desormeaux highlights the potential economic impact of a decline in non-permanent resident (NPR) migration, especially during periods of economic weakness. In this blog post, we will explore the current state of non-permanent resident migration in Canada, the study's findings, and the potential consequences of a reduced temporary migration influx.
Non-Permanent Resident Migration in Canada
Non-permanent resident migration plays a crucial role in Canada's population growth, particularly in most provinces. This category encompasses various groups, including foreign workers, international students, and refugees. Foreign worker migration, in particular, has been a driving force behind NPR growth, accounting for 70% of all growth in this category over the last year. This trend is evident at both the national level and in Canada's four largest provinces.
Study Results and Impacts
The study employs predictive modeling to assess how different levels of NPR admission in 2023 and 2024 could impact the Gross Domestic Product (GDP) of Canada's four largest provinces: Ontario, British Columbia, Quebec, and Alberta. These provinces collectively contribute to nearly 90% of Canada's total GDP in 2022.
The study presents various scenarios, including an upside, downside, and worst-case scenario, to predict GDP fluctuations. The results indicate that all four provinces would experience a decline in GDP in the event of reduced temporary resident migration. The extent of the decline varies by province, ranging from a 0.5 to nearly 2 percentage point drop in GDP in the downside and worst-case scenarios.
A decline in GDP has several adverse impacts, including the potential for an economic recession, reduced real income, decreased production, and increased unemployment. A declining GDP signals a negative short-term economic outlook for the country, with far-reaching consequences.
Conclusion: Implications of Slowing Temporary Resident Migration
Temporary resident migration in Canada is closely tied to economic cycles, increasing during periods of economic strength and declining during economic downturns. The study highlights that Canada's recent economic boost due to population growth may not be sustainable in the long term. To navigate the challenges of an aging population and a lack of affordable housing, Canada must ensure the stability of temporary migration during economic volatility.
Desjardins suggests that Canada should improve its data on temporary migration, enabling more informed labor and housing market policy decisions. Accurate and up-to-date information on temporary migration is essential to appropriately calibrate policies and ensure the continued health of the Canadian economy, even in the face of economic uncertainty.
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