According to a report that was recently issued by one of the top banks in Canada, the country found itself in a "population trap" that was made worse by the policies that were implemented regarding immigration.
Despite the fact that officials believe that immigration is generally advantageous to the potential GDP of the country, the Special Report, which was co-authored by economists Stéfane Marion and Alexandra Ducharme of the National Bank, issued a warning that "all good things have their limits."
According to the paper, the term "population trap" can be described as a situation in which it is impossible to achieve advances in living standards due to the fact that the population is rising at an excessively rapid rate.
Canada's population increases
Economists predicted that the population of Canada would increase by 3.2% in 2023, which is five times greater than the average growth rate of the nations that are members of the Organization for Economic Cooperation and Development (OECD).
Within each of the ten provinces, this kind of expansion has been observed.
The number of people living in Canada increased by more than 1.2 million in just the year 2023 for example.
Annual population growth
According to Ducharme and Marion, in order to "escape" from the phenomena of the population trap, the yearly population growth in Canada should not surpass 300 thousand to 500 thousand people.
On its own, Canada has set a target of accepting 485 thousand permanent citizens in the year 2024, and it has set a target of accepting 500 thousand new permanent residents in the years 2025 and 2026.
Immigration system
A statement made by the federal government in November stated that it would try to "recalibrate" the amount of admissions of temporary residents "to ensure that this aspect of our immigration system also remains sustainable."
Students who are enrolled in post-secondary institutions are among the greatest groups of temporary residents, and the number of these students has dramatically expanded over the past several years.
In an effort to slow the rise of the temporary population in Canada, the federal government is doing research into potential solutions.
Mark Miller, the Minister of Immigration, Refugees, and Citizenship, made an announcement in December regarding new measures that would be implemented for international students who are interested in study in Canada. On Monday, Miller went so far as to declare that the federal government is contemplating imposing a limit on the number of international students.
According to the research, the housing supply shortfall in Canada has hit a new record high, with an average of only one residence for every 4.2 persons of working age. This is a significant increase from the previous record.
According to economists working for the National Bank, despite the fact that the federal government has implemented plans to speed up the supply of housing, these steps are not nearly enough to counteract the consequences of Canada's rapidly expanding population.
The estimations that they have provided suggest that in order for Canada to achieve its "unattainable goal," the country will need to increase its capacity for the construction of housing to approximately 700 thousand units per year.
Labor shortage in Canada
There is a lack of labor in Canada, which has resulted to high construction prices. This is another factor that contributes to the difficulty of growing the supply of housing in the country.
It was stressed by economists that the country's population is expanding at such a quick rate that "we do not have enough savings to stabilize the capital-labor ratio and achieve an increase in GDP per capita."
"We currently lack the infrastructure and capital stock in this country to adequately accommodate the current population growth and improve our standard of living," they concluded. They went on to say that the primary answer to this problem is to considerably slow down the rate at which the population of Canada is growing.
