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Canada may face an economic downturn if temporary resident admissions are halted

Canada's economic future increasingly relies on population growth, largely from immigration, according to a Desjardins Securities report. This growth, reaching 3.2%, has benefits such as labour market support but also raises housing costs. A reduction in temporary residents could exacerbate the looming recession. Randall Bartlett, senior director of Canadian economics at Desjardins, warns against a rapid decrease in newcomer arrivals, as it could lower potential GDP and deepen the recession expected in 2024. However, keeping high newcomer admissions could strain finances and housing affordability. Policy adjustments could help manage the economic impact, but the balance is challenging. Both scenarios present implications for inflation, interest rates, and the housing crisis.



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