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.
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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.
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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.
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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