Canada’s population increased by more than 1.1 million, or 2.9%, since July 2022, a growth rate that Statistics Canada says is the highest ever for a 12-month period since 1957. In 1957, the population increased by 555,000 people, or 3.3%, due to the Hungarian refugee crisis and it being the height of the baby boom, the agency said.

“If the rate of population growth seen this past year remained constant in the future, it would lead to the Canadian population doubling in 25 years,” said a report released by Statistics Canada on Sept. 27. “Close to 98% of the growth in the Canadian population from July 1, 2022, to July 1, 2023, came from net international migration, with 2% coming from the difference between births and deaths.”

The large increase in immigration comes as the country tries to tackle a housing crisis. Aside from encouraging developers to build more houses, the government could consider placing a cap on the annual number of international students, Housing Minister Sean Fraser said in August, although no such plan has been drafted yet.

But Canada is also hoping to bring in 500,000 permanent residents annually from 2025 onward. Some economists are warning the government might struggle to meet that target if it doesn’t improve amenities such as housing and medical care.

A Toronto-Dominion Bank report in July said the housing shortage could widen by an additional 500,000 units within two years if immigration levels continue at their current rate.

The number of non-permanent residents in Canada, which include foreigners who either have a work or study permit in Canada and their family members, or someone who has claimed refugee status has increased by 46% in the past year, according to Statistics Canada’s estimates. It’s the largest-ever year-over-year increase based on comparable data available to the agency. Currently, the number of non-permanent residents is estimated to be 2.2 million, which is higher than the 1.8 million Indigenous people counted during the 2021 census.

The fertility rate in Canada reached a record-low level in 2022, with 1.33 children per woman, compared with 1.44 in 2021, according to Statistics Canada. It added that the number of people aged 65 and older is growing fast and now outnumbers the number of children aged zero to 14.

The surging population growth and improving labour market integration are positive for Canada’s economy, but also complicate monetary policy, Marc Desormeaux, a principal economist at Desjardins, said.

“Skilled newcomers can help fill job shortages, thereby reducing potential wage-push inflation. However, near-record rates of population growth can also contribute to outsized employment growth, that could put upward pressure on consumer demand and ultimately drive further price increases,” he said in a note. “Skyrocketing population growth also reinforces the need to boost the housing supply, particularly in an environment of severely stretched housing affordability.”

Robert Kavcic, a senior economist at the Bank of Montreal, said the latest population numbers weren’t surprising, but the growth puts a lot of immediate stress on things such as housing, services and infrastructure. “Longer term, I think you will get more of a labour force growth impact,” he said. “Down the road, it starts becoming disinflationary, but that’s a story for much further down the road.” Kavcic also doesn’t think the Bank of Canada is going to be influenced by the latest demographic numbers, but said the near-term impact could mean interest rates remain higher for a longer period than expected.

Among the provinces and territories, Alberta experienced the fastest demographic growth at 4%. Its growth, though, is not due to just international migration, but is also “record net gains from migratory exchanges between provinces.” Alberta had 56,245 more people move to the province than leave it, the highest annual net interprovincial gain ever recorded for any single province or territory, Statistics Canada said.

Newfoundland and Labrador registered its highest population growth in more than 50 years, but its rate was still the lowest among the provinces at 1.3%. Quebec had the second-lowest growth at 2.3%.

“The strong growth seen across the country is, in large part, a result of the increase in the number of temporary immigrants,” the agency said. “Close to one million non-permanent residents lived in Ontario, almost half a million in Quebec and around 400,000 in British Columbia.”

Source: Financial Post