According to a new TD Economics report, Canada's historic population growth risks exacerbating the country’s biggest problem areas.
What happened: With Canada on track to welcome over one million permanent and temporary residents in 2023—between immigrants, students, temporary workers, and refugees—economists from a Big Five bank are urging the feds to pump the brakes.
TD estimates the current population growth rate could spur a housing shortfall of 500,000 units by 2025, with efforts to boost construction unlikely to fill the gap.
Adding demand to the economy could also force the Bank of Canada to raise its equilibrium interest rate (which anchors the economy) by half a percentage point.
- Immigration could add stress to services, including Canada’s ailing healthcare sector—we already rank 31 of 34 OECD countries for hospital bed availability.
Why it matters: Immigration is vital for balancing an ageing population and boosting slowing productivity. But a growing chorus of economists fears that a hyper-focus on immigration could have unintended consequences and distract from other solid policy solutions.
For example, another TD report pegged increased childcare availability as a pillar of boosting labour force participation, as it frees up caretakers (in Canada) to work.
Bottom line: By welcoming two million people in two years, all levels of government now have a responsibility to make sure people can find the jobs they’re qualified for, and that the country’s housing markets, infrastructure, and services are ready to absorb the shock.—QH