Choose your settings
Choose your language
Economic Viewpoint

StatCan’s New Population Projections Point to Larger Federal Deficits Ahead

July 25, 2024
Randall Bartlett
Senior Director of Canadian Economics

Statistics Canada’s latest population projections raised some eyebrows thanks to downward revisions resulting from a sharp reduction in non-permanent residents (NPRs).

Assuming the federal government is successful in reducing the number of NPRs in Canada’s total population over the next three years, working-age population growth would be much lower than expected in Budget 2024.

According to our research, slower population growth due to fewer NPR admissions will reduce both real GDP growth and inflation, thereby weighing on nominal GDP—the broadest measure of the tax base.

If the federal government reaches its intended goal of fewer NPRs, the resulting lower revenues should lead to larger deficits and higher debt. Indeed, the federal debt-to-GDP ratio could end the next five years at a higher level than in Budget 2024’s downside scenario.

Add to this additional spending not included in Budget 2024, such as the recently announced increase in defence spending, and the federal government’s fiscal anchors are very much at risk.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.