Canada Cannot Afford to let Pandemic Derail Immigration-Fuelled Economic Growth


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Canada should continue to encourage high levels of immigration post-coronavirus restrictions to ensure its economy rebounds as quickly as possible from the impact of the pandemic.

That is the central message of an RBC Economics report, warning of the damaging impact of border and travel restrictions on a country reliant on immigration for economic growth.

As the recovery from the COVID-19 pandemic continues, scaling back immigration to Canada could impede the rebound, given the country relied on newcomers for 80 percent of its population growth in 2019.

After welcoming 341,000 new permanent residents in 2019, Canada’s pre-pandemic target for 2020 was up to 370,000 newcomers. With the latest available figures showing arrivals down 26 percent in March, it is unlikely to hit this year’s target, depending on how long border and travel restrictions continue.

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RBC’s report warns Canada faces long-term repercussions if a post-pandemic world witnesses a scaling back of global immigration.

“Canada has been one of the world’s top destinations for immigrants, and this year was supposed to be no exception,” the report says, predicting a sharp decline in immigration levels this year.

For Canada, that sharp decline will impact numerous industries that have come to rely on increasing immigration.

“The disruption will reverberate across the economy, given our reliance on immigration for labour-force growth and to offset Canada’s ageing demographic,” the RBS report says. 

“Among the potential casualties: industries with labour shortages, urban rental and housing markets, and university budgets.”

Coupled with the 26 percent drop in new permanent residents, March also saw the arrival of agricultural temporary foreign workers decline by 45 percent, and international student arrivals fall by the same 45 percent.

The drop in foreign workers came despite a number of special measures and exemptions introduced by the federal government to help maintain Canada’s food chain.

Percentage Decline of New Permanent Residents, February to March 2020

Canada’s real number of new permanent resident arrivals could fall by 170,000 this year if border and travel restrictions are not lifted before the end of the summer.

Stakeholders are urging Canada to see the pandemic as a short-term shock, and not to make the mistake of moving away from the long-term strategy of immigration-fuelled growth.

Canada’s immigration system has already shown itself able to pivot and adapt in the face of the crisis. 

Immigration, Refugees and Citizenship Canada (IRCC) has focused Express Entry draws on the Provincial Nominee Program and the Canadian Experience Class (CEC), while the provinces themselves have shifted to inviting specific workers, excluding high-volume applications and refocusing skilled worker categories.

The shift happened impressively smoothly, and with many officials working from home, showing the adaptability of the world’s most modernized immigration system.

Still, stakeholders warn that allowing the pandemic to usher in a period of falling immigration levels would be dangerous for the economy long-term. New immigrants will remain crucial to post-pandemic Canada. 

Canada’s educational institutions are set to be at the sharp end of the short-term shock, with colleges and universities increasingly reliant on international students to balance their budgets.

With classes likely to continue online at the start of the fall semester, schools are set to see a drop in demand from foreign students who pay dramatically higher tuition fees.

These students have also become an increasingly important pool of new permanent residents to Canada, with a number of incentives in place to help young people, study here, before establishing themselves in the country.

While Canada has had no choice but to close borders and restrict travel to limit the spread of the deadly COVID-19, the choices it makes in the wake of the pandemic will determine whether the economic impact endures.

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