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

People are silhouetted as buildings cast their shadows in front of the Peace tower on Parliament Hill, in Ottawa, Wednesday, Nov. 27, 2024. (Adrian Wyld / The Canadian Press)

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.

This report by The Canadian Press was first published on Dec. 6, 2024