A new analysis from BMO Capital Markets suggests that the recent slowdown in Canadian population growth is unlikely to have a significant negative impact on the country’s economy. Contrary to concerns that fewer people might result in weaker economic performance, BMO's review of over 30 years of data reveals no strong correlation between population growth and short-term economic trends. Instead, they found an inverse relationship, with economic growth often picking up when population growth slows down, and vice versa.
This finding challenges the common belief that Canada's economic strength depends heavily on a rapidly growing population. Typically, it’s thought that more people drive demand for goods and services, boosting GDP. However, BMO's chief economist, Douglas Porter, explained that historical data shows that population booms don’t necessarily fuel immediate economic gains. In fact, periods of economic strength can follow slower population growth rates, which might indicate a more complex relationship between these factors.
Moreover, the report highlights that past population surges, like during the 1990s, did not prevent economic slowdowns. For example, immigration remained high even as Canada experienced economic downturns. This suggests that other factors, such as business cycles and external economic conditions, may play a bigger role in shaping the economy than population trends alone.
In conclusion, while Canada’s population growth is slowing, it is not expected to trigger a significant economic decline in the near term. The historical data suggests that the economy can adjust and even thrive under slower population increases, alleviating fears of a dramatic downturn linked solely to this demographic shift.
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