Blocking non-permanent resident admissions could worsen recession in 2024: Desjardins report

Canada’s population has increased over the past year, and the growth has been largely driven by foreign workers and international students. But as the federal government considers limiting non-permanent residents (NPR), a new Desjardins report says such a move would “deepen the recession expected in 2024.”

The report, released Wednesday and written by Desjardins senior director of Canadian economics Randall Bartlett, says NPR’s number is expected to fall naturally as the economy slows. Based on current baseline projections, Bartlett expects real GDP growth to fall to 0.1 percent in 2024, down from 1.1 percent a year earlier.

However, if the federal government introduces new policies designed to cause NPR admissions to fall to zero, the report says Canada’s real GDP could contract by 0.7 per cent in 2024. On top of that, such a move could ” slow the subsequent recovery” after the recession and lead to lower potential GDP.

“As such, caution is warranted on the part of policymakers to minimize the economic disadvantages of slowing the arrival of newcomers too quickly,” Bartlett wrote.

Canada’s population rose to 40.5 million last fall, making it one of the fastest-growing countries in the world. In the third quarter of 2023 alone, the country’s population grew by more than 430,000 people.

Much of this growth was driven by temporary residents. Statistics Canada says there were more than 2.5 million NPRs in Canada in October 2023, up from 1.7 million at the same time last year. This marks a record rate of NPR growth over the past 50 years since data became available.

If Canada were to double the current pace of NRP admissions, Bartlett says the economy could grow one per cent this year and have much stronger growth in the years to come.

However, the report says “sustained high levels of NPR admissions” could impact housing affordability and worsen inflation, which could also force the Bank of Canada to keep interest rates higher for longer.

Given these concerns, the federal government has flagged potential reductions to temporary resident admissions.

In October, Immigration Minister Marc Miller said he was looking for ways to make Canada’s immigration system better “aligned” with the country’s labor needs. Last month, Miller also announced that his administration would increase the cost-of-living financial requirement for international students from $10,000 to $20,635. The minister also threatened to impose a cap on the number of international student visas if provinces do not do enough to curb diploma mills.

“Before September 2024, we are prepared to take the necessary measures, including a significant limitation on visas, to ensure that designated learning institutions provide adequate and sufficient support to students as part of the academic experience,” he told the journalists at a press conference on December 7.


With files from The Canadian Press and Charlie Buckley of CTVNews.ca

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