Canada continues to outperform its peers for population growth. Statistics Canada (Stat Can) data shows record population growth in 2022. The increase was driven entirely by immigration, with most of it “temporary” labor. One of the country’s Big Six banks believes the boom is needed to help the country’s long-term labor market issues, but first, it’ll add to infrastructure stress and inflation.
Canada Hit A New Record For Population Growth
Canada’s population ripped higher—entirely due to immigration. Population estimates rose 0.7% (273.9k) to 39.6 million people. That puts the estimate 2.7% (1.1 million) higher in 2022. The country has never seen such a rapid increase in population.
Source: Stat Can; BMO Economics.
Temporary Immigration Is Driving Canada’s Population Growth
Canada’s race to be the fastest-growing G7 country depends entirely on immigration. Natural growth, births minus deaths, accounted for just 6,263 people in the final quarter. Net international migration represented the remaining 267.6k people for the quarter.
Stat Can made a point of emphasizing the role of temporary immigration behind the surge. Non-permanent residents represented 607,800 of the 1.1 million increase in 2022.
“This is almost entirely an immigration story, led by a massive rebound in nonpermanent resident flows (i.e., international students and temporary foreign workers),” said Robert Kavcic, a senior economist at BMO.
Canada Needs The Population Growth, But It Will Drive Infrastructure Stress & Inflation
Canada’s lack of natural population growth means it faces a shortage of prime-aged workers. “Suffice it to say that the taps on immigration are fully open, which comes with a purpose, but also a near-term cost. Canada needs labor supply with the peak of the Baby Boom now in the 60-65 cohort,” he said.
The surge in temporary immigration is one solution to the labor shortage. While it’s faster than natural growth, it isn’t an immediate solution and comes at a cost.
“… integration of new Canadians into the labor market takes time. While that is going on, these flows add to aggregate demand, infrastructure stress, and inflation pressure immediately, while weighing on per-capita growth,” said Kavcic.
