Canada’s immigration heavy population growth plummeted during the pandemic. BMO Chief Economist Douglas Porter is starting to see population growth finally stabilize. However, it’s at a much lower level than the country saw pre-pandemic. While the most recent quarter shows near-normal growth, a lot of ground needs to be made up. If it isn’t made up quickly, it can be problematic for economic growth and home prices.
Canadian Population Growth Found A Bottom?
Canadian population growth has plummeted, but is finally showing some signs of stabilizing. The population increased 0.2 percent in the second quarter of 2021, rising to 38.1 million people. Porter said this is close to typical for the quarter, but the annual growth is very much lagging.
The annual rate of population growth was just 0.4 percent, or roughly 150,000 people. Not even close to the annual growth seen the year before, which came in at 1.5 percent, about 575,000 people. That’s a drop of just under three-quarters, which is huge.
Falling Immigration Slowed Population Growth
Canada’s robust population growth has been mostly immigration recently. It’s a plan that doesn’t work all that well in a pandemic, as we have just seen. “Not surprisingly, the slowdown was mostly driven by a near-50% plunge in the number of immigrants, and an outright decline in non-permanent residents,” said Porter.
The drop in immigration made the country largely dependent on the birth rate, which isn’t very high. Though the most recent quarter did see an uptick in international students. It just wasn’t enough to make up for the past year.
Housing Usually Cools In These Circumstances
Even with population growth rising towards normal levels, the country is playing catch-up. “From an economic perspective, the stark cooling in population would normally chill housing demand, but clearly other forces took over. As well, consumer spending and job markets have been overwhelmed by greater forces,” he said.
“However, if inflows remain subdued for long, underlying demand will cool (for housing and goods), while labor supply will be constrained. Bears watching.”
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