By Paul Vieira
OTTAWA--Canada's population surpassed the 41-million person mark in the first quarter, with nearly all of the robust on-year growth powered by immigration.
Economists say population growth has added to aggregate demand in the economy, and is a chief reason why Canada has yet to fall into recession amid historically high borrowing costs. Still, there have been repercussions, analysts say: the number of new people arriving has strained housing affordability, which is at a near four-decade low. And employers have yet to place all these arrivals into jobs, leading to a climb in the unemployment rate to a 28-month high.
Statistics Canada said Wednesday the country's population reached 41.01 million in the first quarter, which represents a 0.6% gain from the previous quarter and a 3.2% increase from the same year-ago period. The January-to-March period this year marked the third consecutive quarter in which Canada's population rose 3% on a 12-month basis.
Over a two-year period, the population grew 6.3% in the first quarter.
Overall, Canada's population grew by 242,673 people in the first quarter, and over 99% of the rise can be attributed to immigration. Relative to other major developed-world countries, Canada has set aggressive immigration targets, to help fuel growth and find workers to take up vacancies. As a result, Canada has the fastest population growth among the Group of Seven economies by a wide margin.
However, in recent months, Canadian officials have tried to apply the brakes to rapid-fire immigration growth, in response to anger from voters about accelerating rents and housing-related costs. Canada said it would reduce the share of temporary-visa holders in the country by 20%, from a roughly 6.5% share of the population to 5%, over a three-year period. Canada has also imposed a two-year cap on undergraduate student visas.
The rise in immigration is "contributing to pressures in inflation components linked to house prices, given that it is adding more to housing demand than to housing supply in the context of structural imbalances in the Canadian housing market," Bank of Canada researchers said in a paper late last year. Shelter costs represent the biggest upward pressure on Canadian inflation, data indicate.
In its most recent economic forecast, the Bank of Canada--which cut its main policy rate this month--said it anticipates annual population growth to slow sharply beginning next year, to 1%, based on government measures announced to date. Economists at the Royal Bank of Canada and Desjardins Securities said this decision would weigh on growth in the coming years.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
06-19-24 0957ET
