Canada could see 170,000 fewer new immigrants this year — just when it needs a fresh boost to revive
Canada could see 170,000 fewer new immigrants this year, serving another blow to the country that has relied on the influx of immigrants to drive the economy.
Royal Bank of Canada said travel restrictions and border closures due to the pandemic saw permanent-resident additions drop 30 per cent in March compared to the previous year. “If these restrictions last all summer, we expect to see 170,000 fewer permanent residents entering the country in 2020 than planned — all in a year in which Canada was supposed to welcome a record number of newcomers,” RBC said.
Canada’s population grew around 580,000 people (or 1.6 per cent) last year, with immigrants driving 80 per cent of the increase. “Indeed, almost two-thirds of immigrants are in the prime working ages between 25 and 54. Without immigration over the past 15 years, Canada would have aged on a similar trajectory as 1990s Japan. Instead, Canada is one of the younger countries in the G7,” wrote Andrew Agopsowicz, senior economist at RBC.
The slowdown in immigrant flow is going to hit a number of key sectors of the economy, such as housing.
“Nearly all of Canada’s largest cities have seen GDP grow faster than the national average, reflecting their large immigrant populations,” Agopsowicz stated. “In fact, with closed borders, Toronto, Vancouver and Montreal would all have seen declines in population in 2019, as Canadian-born millennials fled for more affordable outlying areas. A slowdown in immigrant-related demand for homes could squeeze the rental and housing markets.”
The absence of foreign students from universities will also rob the economy of at least $6 billion in revenue and a valued source of future skilled workforce. In 2019, around 11,000 new permanent residents had previously studied in the country.
Without new immigrants, Canada will be heading towards “a fiscal cliff”, as the price tag for fighting COVID-19 has already hit $160 billion, and Ottawa needs to generate revenues to start paying off the mounting debt.
“Canada entered this crisis with a federal debt-to-GDP ratio (31 per cent) that was lower than many other major economies, but limited fiscal wiggle room to maintain it, according to the Parliamentary Budget Office,” said the RBC analyst. “Its projections, however, assumed Ottawa would maintain healthy immigration numbers, and didn’t take into account the added costs of supporting a COVID-stricken economy.”
Benjamin Tal, an economist at CIBC World Markets Inc., also believes immigration flow will drop precipitously this year with no clear path to recovery. But there are external factors that could drive some immigration.
Canadian citizens living in Hong Kong could start returning as that region sees turmoil amid Chinese clampdown on civil liberties. Meanwhile, Canadians are also unlikely to migrate to the United States due to lack of opportunities amid a slowing economy and, to a degree, racial unrest Stateside.
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