A new report asserts that the country needs to welcome many more immigrants to counteract demographic aging.
The analysis by Desjardins, published today, established how much the working-age population needs to grow in order to maintain the same old-age dependency ratio, which refers to the proportion of people aged 15 to 64 compared to those over 65.
The report found that the working-age population would need to grow by 2.2 percent annually until 2040 to maintain the same proportion as in 2022.
If the country wanted to return to the average old-age dependency ratio it had between 1990 and 2015, that group of Canadians would need to grow by 4.5 percent annually.
"I feel like the discussion around immigration levels in Canada overall focuses on the immediate impact on the Canadian housing market," said Randall Bartlett, Senior Economist at Desjardins.
"So, what I wanted to do was step back and provide a broader economic context around immigration and why immigration to Canada is important."
The potential increase in immigration levels has sparked a debate on whether the country can handle higher inflows of newcomers amidst a housing crisis, and what would be the overall economic impact of having more people in the country.
Canada's population grew by over a million people last year, a record for the country. Its total population increased by 2.7%, the fastest rate since 1957.
The significant population growth comes as the Liberal government contemplates higher annual immigration targets, aiming to welcome 500,000 immigrants per year by 2025.
Desjardins' analysis concludes that Canada's plan to increase immigration could boost per capita GDP if newcomers continue to have the same success in finding employment as they have recently enjoyed.
Regarding the pressure on the real estate market, Desjardins estimates that the country would need to build an additional 100,000 units each year to offset the upward price pressures caused by having a larger number of permanent residents in the country.
A recent analysis by BMO found that for every one percent increase in population growth, housing prices generally rise by three percent.
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