Canada’s GDP Lags OECD As Immigration-Led Growth Strategy Backfires

Canada’s big bet on lofty immigration targets was meant to boost GDP. But it flopped—OECD data shows Canada’s growth lagged the 38-country average. The strategy didn’t just fail to deliver; it left Canada trailing its advanced economy peers. 

Canada Led The OECD for Population Growth, Used Immigration As Stimulus

Canada made a big bet on immigration post-pandemic, arguing it would boost its economy. In 2022, it scaled up immigration to hit the highest growth rate since the 1950s. At the time, economists agreed that immigration was important to fill the skills gap—though the pace would lead to stress. 

At a high level, it’s a straightforward plan. More people means more demand, and more demand means greater economic growth. A year later, the OECD declared Canada had the fastest-growing population of the group, but noted the lack of GDP growth was problematic. 

Canadian GDP Growth Falls Behind OECD As Immigration-Driven Growth Fails To Deliver

GDP: Annual growth rate for OECD members and the organization’s aggregate areas.

Source: OECD; Better Dwelling. 

Canada logged another year of lackluster growth with its immigration-as-stimulus plans. Real GDP showed annual growth of 1.5% in 2024, below the OECD’s total growth of 1.7% over the same period. This marked the second consecutive year of underperforming the advanced economies’ average—despite leading the group’s population growth in 2023. 

By itself, the shift is surprising coming out of the pandemic. In 2022, GDP growth in Canada (+4.2%) led the OECD (+3.2%) by a whole point, behind just two G7 countries—Italy and the UK. However, it makes sense when viewed in the context of its population strategy. 

Canada No Longer Leads, It’s Falling Behind

By accelerating growth so quickly, demand for necessities outpaced aggregate demand. Prices in those areas surged without adding productive output, eating into disposable income. The population also grew faster than the economy added jobs, leading to higher unemployment. More unemployed people and a higher cost of living—a deadly combination, underscored by falling per capita GDP. 

Overusing any stimulus tends to backfire. At a certain point, it turns into excess and produces the opposite effect. Many countries could grow their populations like Canada did, but few would take such a reckless approach. Scaling up a population takes more than just calculating 3% of the base each year. 

Immigration is a long-term growth strategy that broadens talent and output. Canada excelled at it for decades—until it pivoted to short-term gains. Now, instead of leading, Canada’s economy is falling behind. The slowdown is often blamed on recent trade woes, but the problem started years ago.