Canada’s population boomed by 1.2 million people over the last 12 months but the positive support to the labour market and economic growth risks coming at a cost of worsening dislocations in other segments of the economy, says a report by TD Economics.
Toni Ferreira
Continuing with a high-growth immigration strategy could widen the housing shortfall by about a half-million units within just two years. Recent government policies to accelerate construction are unlikely to offer a stop-gap due to the short time period and the natural lags in adjusting supply, said the report.
“In addition, we estimate that the neutral interest rate level would likely need to be lifted by an extra 50 basis points relative to prior assumptions on population growth. The population surge is a textbook demand shock. If sustained over time, the boost to industry profits, labour income and government tax revenues help re-align priorities to what’s in high demand versus what’s in short supply. However, the operative words are ‘over time’. The speed of change defines whether economic and social factors can ‘catch up’,” it said.
“Policymakers must strike the right balance between the ability to absorb population growth within the economic and social infrastructures, while leveraging policies to better utilize the current workforce and integrate new Canadians.”
The full report can be found here.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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