Immigration curbs could hit Canada’s growth

The ostensible reason that the government of Canadian Prime Minister Justin Trudeau had announced reduction in the visas for foreign students, and for immigrants in general, is that housing shortage has emerged, rents have gone up and so has inflation.

But it is believed that Trudeau was targeting more the students from India, who comprise the larger number among foreign students, seeking admission in Canadian colleges and universities.

This is due to the diplomatic stand-off between Canada and India over the killing of the Canadian citizen and Sikh activist Hardip Singh Nijjar last year and the Canadian Mounted Constabulary believes that there was an Indian officials’ hand in it, though Trudeau had admitted that when he made the charge first in September 2020 he had no evidence at hand.

But curbing immigration out of political pique has economic consequences. And that is what Canada’s central bank governor has said in a public statement.

Governor Tiff Macklem said cutting down on immigration could impact economic growth though the numbers are yet to be worked out.

The less number of immigrants could mean lesser population and therefore there could be less demand and less expenditure on the part of the consumers. 

And this is what will impact the economic growth figures.

The Bank of Canada in its annual report projected the GDP growth for 2025 to be 2.1 per cent, and 2.3 per cent for 2026. The economists say that the growth rates could be achieved only if the immigration flows continue, and cutting the number of immigrants would have an impact on growth.

In most Western countries, including the United States, Canada, the European Union (EU) members, the burden of immigration on the social security system of the host governments are stated upfront, and they are even exaggerated, especially the anti-immigrant right-wing parties.

But the importance of the immigrants for the economic growth of Western countries is rarely mentioned.

This is the first time that Canada’s central bank governor has expressed his views in the matter, and he has clearly pointed out that if there is less of immigration then there could be less of economic growth.

Prime Minister Trudeau is not a conservative, nor is he an anti-immigration leader. He is a liberal politician – he is the leader of the Liberal Party – in the true sense of the term. But economic problems have arisen for Canada, and there is also the issue of immigrants. One of the countries to be majorly affected is India because the number of migrants from India – students and others – is on the higher side.

The Sikhs in Canada are an integral part of the country because they were the earliest migrants from late 19th to early 20th century, and they wield considerable political influence.

Trudeau’s Liberal Party is dependent on the Sikhs’ New Democratic Party (NDP) for remaining in power. And the Sikhs have become critical of the growing presence of Indians in Canada. Trudeau is engaged in dealing with the issue, and his immigration policies are partly shaped by the pressure exerted by the Sikh lobby.

Canada’s population is 40 million, and its population density is 4 people per square kilometre. It has one of the lowest population densities in the world. Canada welcoming migrants is not entirely due to its enlightened political liberalism. It is also due to economic and social compulsions. And it is inevitable that some countries are going to take advantage of the opportunity much more than others. According to National Foundation for American Policy (NAFP) analysis, “More favourable immigration policies are a significant factor in Canada attracting international students, particularly students from India.”