Canada Bank to Review Growth Projections After New Immigration Targets Announced in Ottawa

The Bank of Canada has announced that it will review its projections for economic growth following the federal government’s announcement of new immigration targets. The new targets aim to cut the number of newcomers by 21% next year, which may have a significant impact on the country’s population growth and GDP.

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New Immigration Targets

The federal government recently announced changes to its immigration targets for the next three years. The target for 2024 is about 485,000, while the target for 2025 is 395,000, and 380,000 in 2026. This reduction in immigration targets may have a significant impact on the country’s population growth, which could in turn affect economic growth.

Bank of Canada’s Projections

The Bank of Canada released its forecast on Wednesday, where it announced a 50-basis-point cut to its policy rate. The bank also forecasted a pick-up in household consumption and 2.1% GDP growth next year. However, with the new immigration targets, the bank may need to revise its projections.

Impact on Economic Growth

According to Bank of Canada governor Tiff Macklem, the new immigration targets will have a significant impact on economic growth. "Obviously, if you have less population growth, you’re going to have less headline GDP growth," he said during a call with reporters. However, he also noted that there is some risk involved, as population growth may come down faster than expected.

Population Growth

Statistics Canada estimates that population growth will slow down significantly over the next two years, in line with the federal government’s new targets. The bank had assumed average quarterly population growth of 1.5%, but Statistics Canada now estimates -0.2% population growth over the next two years.

Inflation Outlook

Macklem also noted that the new immigration targets will have very little impact on the inflation outlook. "The inflation forecast itself is not that affected by population growth," he said. However, he did note that there could be some effect on demand and supply due to population growth.

Implications for Businesses

The reduction in immigration targets may have significant implications for businesses, particularly those that rely heavily on a growing workforce. The new targets may lead to a decrease in the number of skilled workers available to fill job openings, which could impact business productivity and competitiveness.

Conclusion

In conclusion, the Bank of Canada will review its projections for economic growth following the federal government’s announcement of new immigration targets. The reduction in immigration targets may have a significant impact on population growth and GDP, and businesses should be prepared for potential changes in the economy.