Canada's population surge, while initially beneficial for addressing job vacancies post-COVID, has led to challenges like housing shortages and rent hikes, according to economist Andrew Grantham from CIBC Economics. Grantham emphasized that the population growth, especially since mid-2022, has exceeded housing availability by 35%, exacerbating issues. He noted a significant imbalance, estimating an excess of 200,000 to 700,000 individuals compared to labor force needs, posing potential inflationary pressures.
Despite these concerns, Grantham stressed the positive contributions newcomers make to Canada's economy, particularly in labor markets. With the domestic workforce aging and participation rates declining, immigrants and non-permanent residents have filled crucial job vacancies, especially post-pandemic. However, Grantham acknowledged that the rapid influx may have been overwhelming, leading to adverse impacts as the economy slowed down.
To address these challenges, Grantham proposed recalibrating targets for non-permanent residents, aiming to lower Canada's population growth to under one percent by 2025-26. While this adjustment won't entirely resolve the housing shortage, it is expected to alleviate some pressure, particularly on rental prices within the consumer price index.
Grantham's analysis underscores the delicate balance between managing population growth to ease housing inflation and ensuring a sufficient labor force. While the influx of newcomers has bolstered Canada's economy, the rapid pace of growth has also brought about unintended consequences. As policymakers navigate these complexities, finding sustainable solutions will be crucial for ensuring Canada's continued economic stability and social well-being.
