A recent Desjardins research raises the possibility that Canada is undervaluing the impact of temporary migration on the country’s economy, despite the fact that many correctly attribute the country’s recent increase in permanent residents to the country’s economic and demographic expansion.
In the context of a period of economic instability, economist Marc Desormeaux warns that a fall in non-permanent resident (NPR) migration might “hit hard” Canada’s economy.
The situation of immigration to Canada that is not permanent
In “most provinces,” non-permanent (temporary) resident migration is the main driver of Canada’s population increase.
Note: Groups such as foreign laborers, international students, and refugees are considered temporary residents of Canada.
With regard to NPR growth in the last year, international workers (those with work permits) have been the main driver, accounting for 70% of total increase in this category. It was discovered that this was accurate both nationally and in each of Canada’s four largest provinces (more on that later).
Outcomes and Effects
This study uses predictive modeling to project how different levels of NPR admission across Canada in 2023 (2023-2024) and 2024 (2024-2025) would affect the Gross Domestic Product (GDP) in Canada’s four largest provinces* (Ontario, British Columbia, Quebec, and Alberta). The modeling includes an upside scenario, a downside scenario, and a worst-case scenario.
*In 2022, these provinces accounted for about 90% of Canada’s GDP.
Even though the results vary from province to province and range from a 0.5 to nearly 2 percentage point GDP drop in the worst-case scenario projections, the overall findings of this study indicate that all four of the assessed provinces would experience a decline in GDP in the event that Canada sees a decrease in the number of temporary residents.
This implies that a decrease in the number of temporary residents would have a negative impact on the “health” of the Canadian economy. This is so because “the monetary value of all finished goods and services made within a country during a specific period” is defined by GDP. Stated differently, a decreasing GDP, which is “used to estimate the size of an economy and its growth rate,” would indicate a dismal outlook for the economy in the near future.
The following are some negative effects of a falling GDP:
- A downturn in the economy
- A reduction in “actual income”
- Decreased output
- A rise in unemployment
In conclusion, what may occur in Canada if the movement of temporary residents were to slow down?
In Canada, NPR admissions often follow national economic cycles, rising and falling respectively. Stated differently, NPR admissions in the four largest provinces in Canada tend to rise during periods of economic expansion and contract during recessions.
Given these findings, Desjardins clarifies that Canada’s “recent population-induced boost to economic activity and tax revenues may not last forever” and projects a potential recession in the near future. Stated differently, in order for Canada to attempt to avoid having to “grapple with the immense challenges of a rapidly aging population and a lack of affordable housing supply,” temporary migration to the country must sustain itself during times of economic turbulence.
Desjardins says that in order to do this, Canada should provide more accurate statistics on temporary immigration, as this would enable the nation to “appropriately calibrate labor and housing market policy.”
