Saturday, October 01, 2016

On the growth and the aging of Canada's population

CBC was one of the several news sources to announce earlier this week that Canada's population has grown to surpass the 36 million mark.

A record number of immigrants and refugees arriving on Canadian shores helped push Canada's official population over 36 million as of July 1, Statistics Canada says.

The data agency says there were 437,815 more people living in Canada than there were on the same day a year earlier, bringing the official population to 36,286,425.

In absolute terms, that's the biggest annual surge since 1988. In percentage terms, the population grew by 1.2 per cent.

The "increase is one of the largest increases since the baby boom in the 1950s," BMO economist Doug Porter said, "although this recent increase is driven more by immigration."

Indeed, the numbers show that some 320,932 immigrants arrived in Canada between the two Canada Days. More than 30,000 Syrian refugees are included in that figure, as they are classified as permanent residents by Immigration, Refugees and Citizenship Canada.

"The country had not received such a large number of immigrants in a single annual period since the early 1910s, during the settlement of Western Canada," Statistics Canada said in a release.

The relevant tables are here.

As Bloomberg noted in a recent article, this growth is not nearly enough, not to rejuvenate Canada's working-age cohorts and not to drive economic growth to hoped-for levels.

Bank of Canada Governor Stephen Poloz gave a blunt speech last week, saying that five decades of expansion powered by the Baby Boom generation is ending, and Canada's potential economic growth has slowed to 1.5 percent. That pace is almost a full percentage point below the average gain in gross domestic product over the last 35 years.

For Canada, at least, business leaders should now count themselves lucky to earn a "pretty good return'' of 4 percent like some companies in Asia, he said. Young people must think about working longer and saving more to fund the retirement their parents had, and governments must make tougher decisions on tax, trade and immigration policy in the hopes of salvaging marginal gains in future income growth, Poloz said.

``Those folks have been entering retirement for the past few years, and potential economic growth has been slowing as a direct result,'' Poloz said last week in Quebec City. ``We cannot just sit back and wait for these slow-moving forces to reverse.''

The biggest gain in the population over the past 12 months has been the 55 years and older set, which rose almost six times more than the so-called prime age population aged 25 to 54.

It's a trend mirrored in most industrialized nations such as Japan, where the central bank is struggling against deflation and anemic growth. Central banks around the world have set near-zero or negative interest rates aiming to regenerate inflation. Slow global growth hurts Canada's trade-dependent economy by curbing exports of crude oil, machinery and minerals.

The fading job market means the Bank of Canada's 0.5 percent policy interest rate won't need to rise as soon or as much in past economic recoveries to keep inflation in check. The so-called neutral rate that keeps the economy in balance could be as low as 0.75 percent now from as high as 5.5 percent before the global financial crisis, Poloz said.

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