Canada’s population binge growth is coming to an end—now to deal with the hangover. That was the take from National Bank of Canada (NBF), who notes that this year’s population growth is on track to set another record, but the average annual growth rate will drop 75% for the next 3 years. The move comes as policy makers struggle to absorb the recent boom, and hope to embrace more manageable progress going forward.
Canadian Population Growth On Track For Another Record In 2024
Over the past few years, Canada’s population growth has been advancing at a breakneck speed. It managed to grow a whopping 3.0% in 2023—much faster than its real GDP. NBF notes the rate is on track to hit 3.1% in 2024, which would set a new record. For context, that would mean 7x the average rate seen across the advanced economies that make up the OECD.
“After another record year of demographic growth in 2024, Canada’s economy will experience a population hangover,” explains Stefan Marion, chief economist at NBF.
He adds, “After all, there was always going to be a limit to the absorptive capacity of our economy.”
Canada To Pause Aggressive Population Growth Rate, Target 75% Lower
Adding people is easy. Allocating those people to ensure they’re effective resources is much more difficult. After finding that out the hard way, Canada is set to impose limits on how its population will advance going forward.
Recently announced measures include a cap on student and temporary visas. It’s finally clicked that successfully growing a country’s population is more difficult than just allowing people in. It also requires building infrastructure first.
“As we now move to build the infrastructure needed to better welcome more people to our country, our statistical agency’s new projections predict a population hangover of about three years, based on current policies,” said Marion.
The latest projections show a sharp slowdown in growth. Over the next 3 years, the average growth rate will fall to just 0.7% per year. It’s still extremely high given the 0.4% average rate across OECD countries, but much slower than most have come to expect.
Source: National Bank of Canada.
Canada Still Needs To Deal With The Hangover From Its Recent Binge
The Government of Canada (GoC) move comes after increasing scrutiny over recent growth. The sharp reduction of GDP per capita, declining productivity, housing affordability stress, and rising unemployment all point to poorly managed growth.
The OECD previously warned that Canada’s fixation on a housing-based economy would put its per capita GDP dead last amongst advanced economies for the next 4 decades. That was back in 2019, and the country has only doubled down on that strategy since. It’s reached the point where the Bank of Canada (BoC) has declared a “productivity crisis.” Using immigration as excessive stimulus backfired, actually putting the country further behind.
“Recognizing that the situation was becoming increasingly perilous, the federal government recently decided that it was time to pause to allow the economy to digest the unprecedented population growth binge of the past two years,” says Marion.
“It was the right decision, as our population count for this year is already where Statistics Canada thought it would be in 2028, based on projections made just two years ago.”
