Posted on December 28, 2023

Canada’s High Immigration Is Driving Down Per-Capita GDP: Report

Tyler Dawson, National Post, December 27, 2023

The Canadian economy experienced a contraction “unprecedented outside a recession,” according to a new analysis from National Bank Financial, a trend driven, at least in part, by a population spike that has squeezed per capita GDP growth.

The bank’s monthly economic analysis says that “signs of an economic slowdown have been multiplying.”

“Consumption stagnated for the second quarter in a row, a stinging setback in the current demographic context characterized by record population increases,” the report says.
The recalculated GDP per capita — which the bank’s economists had estimated had contracted by 2.4 per cent — now sits, they say, at a 4.4 per cent contraction during the third quarter.Mikel Skuterud, an economist at the University of Waterloo, said the simple way to understand it is to think of the GDP as a pie, divided by the population, and the per capita GDP is the slice of pie, theoretically, that every Canadian gets. And so, in theory, if the number of people taking chunks from the same pie goes up, the size of the slice goes down.

“I think you’d be hard-pressed to find any economist in Canada that doesn’t believe that the exceptionally high population growth rates we’re experiencing now have contributed to that decline in GDP per capita that we’re seeing,” Skuterud said.


The report also finds that while Canada’s inflation rate is at 3.1 per cent, costs for shelter are growing at six per cent annually. Indeed, many Canadian cities have seen big increases in rental house pricing. In Calgary, the average one-bedroom apartment increased by 17.2 per cent between 2022 and 2023.

“While the central bank is responsible for the increase in mortgage interest costs for homeowners, the rise in rental prices is attributable to the staggering increase in population,” it says.

The report says that Canada’s unemployment rate of 5.8 per cent shows that “hiring is not keeping pace with demographic growth.” In just seven months, the bank says, the unemployment rate grew by ten-eighths of a per cent.


“Unfortunately for Canadians, little turnaround in Canadian living standards appears to be on the horizon,” says a TD Bank report from July.