While Canada's population grew by 1.2 million people in 2023, five times faster than the OECD average, the country does not have the economic capacity to absorb this increase and should review its targets, according to a National Bank study.
• Also read: “The Liberal government has completely lost control in a completely ideological way because they have exponential numbers.”
In a seven-page document, economists at the financial institution report a demographic increase not seen since 1949, when Newfoundland joined the Canadian federation.
To the 360,000 births in the country, around 543,000 people with a work permit, 455,000 immigrants and 123,000 people with a study permit were added in 2023, while 332,000 people died in 2023, an increase of 1.2 million people.
Researchers argue that Canada cannot sustain such population growth, which is above normal for the second year in a row.
The population increased by around 825,000 people in 2022.
“Canada is caught in a demographic trap that has historically been reserved for emerging markets,” they mention. We currently do not have the necessary infrastructure and capital stock to accommodate population growth and improve our living standards.”
“If we want to increase our productivity, our policymakers should set Canada’s demographic targets taking into account the constraints on our capital stock that go beyond the supply of housing,” they add.
In an interview with LCN, economist and chief strategist of the National Bank, Stéfane Marion, reiterates that the impact of such an increase will be particularly felt given the real estate crisis that is raging in several places in the country.
“Historically, when it comes to residential real estate startups, we have had a historical average of one new start for every 1.8 people entering the workforce, but currently we only have one new start for every 4.4 people,” continued Mr. Marion.
“So the demand is huge, and to sustain all of that we would have to double Canada's housing construction capacity tomorrow morning,” he adds.
From what we can read in the study, this goal would be “unattainable.”
Not only housing construction is affected, but the entire economy, adds the chief strategist.
“All the capital is available to produce at an economic level because the population is very vibrant, but at some point there comes a point where, at a certain level, I can no longer increase the income per person because “so many people “In the country, I don't have enough savings at the national level to make investments in all the talent that we will collect at the global level,” he says.
“Immigration is very promising, it always has been, but here I have my investment restrictions that I have to deal with,” he continues. A country's standard of living is determined by production, per capita income or per capita GDP. Then it is clear that we have been stagnating for six years and have actually been declining in the last few quarters.
National Bank economists conclude Canada should review its population growth targets.
“At this point, we believe that our country’s total annual population growth should not exceed 300,000 to 500,000 people if we want to escape the demographic trap,” they argue.
Watch the full interview with the National Bank's chief strategist in the video above