Canada experienced its fastest population growth in 66 years, increasing by 1.3 million people, or 3.2 per cent, in 2023, according to a new report from Statistics Canada.
The country has not experienced such growth since 1957, when the increase was attributed to the baby boom and an influx of immigrants from Hungary.
Most of Canada's growth last year came from immigration, with temporary residents – including foreign workers and international students – making up the largest share of new arrivals.
“We need people to come to Canada to support our economy,” says Matti Siemiatycki, a professor of planning at the University of Toronto. “There are many jobs and professions where there are vacancies and that has an impact, whether in healthcare or in the trades and construction sectors.”
Siemiatycki adds that immigrants also bring “ingenuity, resources and culture” to Canada.
New arrivals are being relied upon to keep up with Canada's aging population and declining birth rates, but the influx also poses a challenge for a country struggling to build the homes and infrastructure needed for immigrants.
“The sheer number of people coming into the country in a short period of time is an incredibly big shock to the economic system,” says Robert Kavcic. a senior economist and director at BMO Capital Markets.
“The reality is that the population can grow extremely quickly, but the supply side of the economy, such as housing and service infrastructure such as healthcare and schools, can only catch up slowly,” says Kavcic. “So there is a mismatch at the moment.”
The impact of this mismatch is most evident in the costs of rent, services and housing.
In December, Kavcic wrote in a note that Canada needed to build 170,000 new housing units every three months to keep up with population growth, noting that the industry was struggling to complete 220,000 units in a full year.
To address that, Ottawa has announced plans to limit the number of new temporary residents while reducing the number of international student visas, a move that economists say could provide some relief in housing and living costs.
“The calculation of the actual caps works relatively well because it would return us to the 1 percent population growth that we were used to over the last decade and that can be more or less absorbed by the economy,” says Kavcic. “The question is whether we see policymakers enforcing and achieving these numbers.”
Economists believe these changes could help ease inflationary pressures and make a Bank of Canada rate cut more likely, but could also lead to slower GDP growth.