New Immigration Targets in Canada – Could subtract nearly 1 percentage point from growth forecast

The Canadian government has been under growing pressure to align the inflow of newcomers to the country with current labour market needs and infrastructure capacity—which prompted a massive reversal of the post-pandemic immigration plan set by the federal government.

Ambitious immigration targets were originally put forward to tackle labour market imbalances and financial stress on government balance sheets from an aging population. The new immigration targets will help rebalance Canada’s housing market, but a shift to strict population controls will come with consequences as well.

Significantly reduced population growth will weigh on government balance sheets as an accelerated aging population puts upward pressure on healthcare costs and pension obligations. Plans to lower population growth, if fully and successfully implemented, could subtract nearly 1 percentage point from our growth forecast for Canada over the next three years.

Source: How Canada’s new immigration targets will impact the economy – RBC Thought Leadership