The Canadian economy will suffer from a lack of immigration due to Covid-19 fallout, but some of the effect may be offset by Canadians returning home from overseas and others deciding not to emigrate in the future, says a new report from CIBC World Markets Inc.
Last year, Canada welcomed almost 500,000 new immigrants, the report said. In the wake of Covid-19, that number “will surely fall dramatically this year,” and it’s not clear how quickly immigration will recover.
“Given the importance of immigration to the Canadian economy, that’s a clear negative,” it said.
On the upside, the paper said that rising tensions in Hong Kong may push Canadians living there to return home.
At the same time, the effects of Covid-19 and the rise of remote working could also stem the flow of Canadians who leave to work abroad, particularly to the U.S., it said.
“Sure, Canadian companies can hire American employees, but given the different cost structure between the two economies, it’s reasonable to assume that the net result will be a plus for Canada.”
At this point, there isn’t good data on the number of Canadians who are living and working overseas, the report noted.
“Our best guess is that there are currently close to 3.5 million Canadians residing outside of the country,” it said, which represents about 9% of the total population.
“If there is a spike in the number of returning citizens and/or a significant reduction in the number of Canadians leaving the country over a short period of time, the impact on population growth, employment, housing, and the need for social services could be notable,” the report said.
To get a better handle on the possible demographic changes wrought by Covid-19, increased co-operation between Statistics Canada, border officials, and agencies in other countries (such as U.S. Homeland Security) would be helpful, the report said.