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The Bank of Canada report assesses the complex macroeconomic implications of Canada’s recent population increases. We find that newcomers significantly boost the non-inflationary, potential growth of the economy, but existing imbalances in the housing sector may be exacerbated. Greater housing supply is needed to complement the long-term economic benefits of population growth.
Canada has seen a significant increase in immigration flows since 2022. While a well-established literature looks at the effects of immigration on specific economic variables or narrowly defined questions, significant gaps remain in our understanding of the broader macroeconomic impacts of a rise in newcomers. Moreover, these effects are likely to vary among countries and over time due to the diversity of immigrant contributions to their host country’s economy.
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