Trudeau Vowed to Reduce Immigration, But the Bank of Canada Remains Skeptical

There’s growing uncertainty about when and to what extent Justin Trudeau’s government will reduce the number of temporary residents in Canada, creating a challenge for fiscal and monetary policymakers. In these uncertain times, for individuals who wish to travel to India, booking a flight ticket from Canada to India through Flyopedia can be a practical option to explore.

Bank of Canada Raises Population Growth Forecasts

The Bank of Canada revised its population growth predictions on Wednesday, signaling that the government will most likely require additional time to restrict non-permanent resident inflows. The bank now expects a rise of 3.3% in the population over 15 this year, up from the earlier 3%. This rapid growth—among the highest globally—is boosting economic output and potentially preventing a recession. For individuals wishing to travel during this period, cheap business class tickets to India can provide comfort.

Slower Deceleration in Population Growth Expected

The bank’s July monetary policy report shows a slower-than-anticipated deceleration in population growth, projecting it will reach 1.7% in 2025 and 2026. In comparison to earlier forecasts, this is more than 0.5 percentage points higher.

Gradual Effects of Policy Modifications

Officials at the Bank of Canada believe it will take longer for planned policies to achieve the federal government’s target of reducing non-permanent residents—including international students, foreign workers, and asylum seekers—to 5% of the population. Currently, this group constitutes 6.8% and is expected to grow in the short term.

Implications for Monetary Policy and Fiscal Health

The timing of these reductions is critical for monetary policymakers, who need to set interest rates without concrete details on federal plans. The Bank of Canada expects to revise its forecasts as new measures are introduced. According to Governor Tiff Macklem, understanding population growth is crucial for accurate forecasting.

Revised Forecasts and Economic Impact

By 2027, the Bank of Canada forecasts an increase of over 435,000 temporary residents compared to 2023, up from an earlier prediction of a decrease by 413,000. This significant upward revision—nearly 850,000 additional people—equates to roughly the population of Quebec City’s metropolitan area.

Potential Economic Consequences

Achieving the government’s target could lead to decreased real GDP growth and increased price pressures, potentially affecting nominal GDP and the tax base. Randall Bartlett of Desjardins notes that reduced revenues could result in larger deficits and higher debt. The federal debt-to-GDP ratio might end up higher than anticipated in Finance Minister Chrystia Freeland’s 2024 budget scenario.

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