Study: A decline in temporary migration could hurt Canada's economy

Publish Date: 02/11/2023

Although many rightfully link Canada's economic and demographic growth to a permanent resident boom in recent years, a new Desjardins study suggests that Canada may be underestimating the effect that temporary migration has on the national economy in this country.

According to economist Marc Desormeaux, Canada's economy could be “hit hard” if the country experiences a decline in non-permanent resident (NPR) migration in the face of a period of economic weakness.In this study, predictive modelling - including an upside scenario, downside scenario and worst-case scenario - is used to project how the Gross Domestic Product (GDP) in Canada's four largest provinces* (Ontario, British Columbia, Quebec and Alberta) would be impacted based on different levels of NPR admission across Canada in 2023 (2023-2024) and 2024 (2024-2025).*These provinces made up almost 90% of Canada's total GDP in 2022

Understanding that these results vary by province - between a 0.5 and nearly 2 percentage point drop in GDP in the downside and worst-case scenario projections - the overall results of this study suggest that all four assessed provinces will see a hit to their GDP if Canada sees a reduction in temporary resident migration.

In light of these results, and expecting a possible recession in the near future, Desjardins makes it clear that Canada's “recent population induced boost to economic activity and tax revenues may not last forever.” In other words, temporary migration to Canada must maintain itself through periods of economic volatility if Canada wants to try to avoid having to “grapple with the immense challenges of a rapidly aging population and a lack of affordable housing supply.”

To accomplish this, Desjardins suggests that Canada needs to produce better data on temporary migration to Canada, as this would help the country “appropriately calibrate labour and housing market policy.”