Temporary Workers, Temporary Growth? How a Slowdown in the Recent Migration Surge Could Exacerbate Canada’s Downturn

Non-permanent residents—not permanent resident immigrants—are driving the majority of Canada’s near-record population gains. Given how volatile this category of newcomer is, and that admissions tend to fall when the economy weakens, we see downside risk to demographic and economic growth across the country next year.

Temporary workers appear to account for the bulk of the recent surge in non-permanent residents, though international students are also contributing. 

We estimate that a worst-case scenario for net non-permanent resident admissions could cut up to 1.3 percentage points from Canada’s real economic growth next year. The hit to Ontario’s and British Columbia’s expansions could be even bigger, but all four of the largest provinces are vulnerable in this respect.

Our work yields two takeaways. One is that the recent population-induced boost to economic activity and tax revenues may not last forever. The other is that we need better data on temporary migration to Canada in order to appropriately calibrate labour and housing market policy.