Lower immigration will slow economic growth, but won't cause recession: report

Photo: The Canadian Press

A report suggests the revised federal policy aimed at dramatically reducing the number of temporary immigrants in Canada will significantly slow economic growth. Pedro Antunes, chief economist, the Conference Board of Canada, is shown in this undated handout image. THE CANADIAN PRESS/HO-Conference Board of Canada

A new report suggests the federal government's rapidly reduced immigration targets will significantly slow economic growth, but not enough to trigger a recession.

The Conference Board of Canada says an abrupt reduction in population will simultaneously reduce economic supply and demand — producing economic impacts different from a typical slowdown.

The report estimates the policy decision will lower real GDP by $7.9 billion in 2025 and $16.2 billion in 2026.

Pedro Antunes, chief economist at the Conference Board, says the immigration changes may be too drastic given the fragile state of the economic recovery, and that a steadier approach would offer a more stable path forward.

In October, the federal Liberals announced a plan to reduce non-permanent residents by more than 900,000 within two years after a high influx of newcomers strained Canadian infrastructure, public services and the housing market.

The report says the government's hasty course correction brings a new set of challenges, potentially straining employers, exacerbating labour shortages and impacting near-term economic performance.