Prairies stand to benefit the most from boost to immigration target: Desjardins

A new Desjardins report suggests Canada’s immigration target increase could spur economic growth, with the Prairies standing to benefit the most.

Principal economist Marc Desormeaux says his analysis finds Canada’s plan to increase immigration could boost gross domestic product per capita if newcomers continue to have the same success getting work that they’ve enjoyed recently.

“That’s significant because there have been questions in the past about whether immigration boosts just GDP or GDP per capita,” he said.

GDP per capita is a country’s gross domestic product divided by the population. Many consider it a better measure of a country’s living standards than the overall GDP figure.

In November, the federal government announced a new immigration plan that would see Canada welcome 500,000 immigrants per year by 2025.

Immigration minister Sean Fraser has argued that a boost to immigration is necessary to address labour shortages and Canada’s aging population.

The Desjardins analysis finds Alberta, Saskatchewan and Manitoba would see the most GDP growth rate boost among provinces.

Desormeaux says that’s because those provinces have higher labour market participation rates and were the first to embrace provincial nominee programs, which allow provinces to select immigrants that match their economic needs.

The report attributes immigrants’ recent success at finding jobs to better integration of immigrants as well as Canada’s tight labour market.

As Canada stares down a potential recession, however, Desormeaux says “it’s an open question as to whether some of these strong labour market outcomes continue over the next year.”

The Bank of Canada’s aggressive interest rate hikes over the last year are expected to slow down the economy significantly in the coming months.

Economists anticipate that slowdown to increase unemployment, which could change labour market conditions for immigrants.

During the global financial crisis of 2008-09, immigrants bore the brunt of the economic downturn, Desormeaux said.

But that hasn’t been the case during the COVID-19 pandemic, he said.

“(So) we think that some of the conditions are ripe for strong labour market integration to continue in the next couple of yours, even if there is a downturn in the Canadian economy.”

The boost to immigration levels has sparked some concerns from policy experts about the potential effects on health care, housing and other services.

While the Desjardins analysis didn’t analyze those potential effects, Desormeaux says Canada needs to ramp up infrastructure and housing to welcome more immigrants.

“Faster population growth raises the stakes, in our view, for all levels of government to deliver on commitments to building infrastructure and affordable housing going forward,” he said.

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