New Federal Immigration Plans: What Will Be the Economic Impact? March 26, 2024

On March 21, the federal government announced a planned reduction in non-permanent residents of about 500K people by the end of 2026. This has forced us to reevaluate our Canadian economic forecast and think about how it could change if these policies are implemented in full.

The proposed changes are meant to address affordability and will likely increase labour productivity, real per capita and average real earnings growth. However, by dramatically reducing the pace of population growth, real and employment should advance more slowly, weighing on inflation. This solidifies our base case for rate cuts to start in June, and reinforces our outlook for more rate cuts than expected by the consensus of economists.