The offer on the real estate market is not sufficient so that we can find solutions to the scarcity of labor only with immigration, believes the chief economist of the Mouvement Desjardins, Jimmy Jean.
Immigration and the rapid integration of new immigrants have played a positive role in contributing to a moderation in inflation in recent months, the economist said during a virtual conference on Wednesday to discuss the economic outlook.
But that can’t be the only solution, he said. “Is demography the solution to inflation? The answer, clearly, is no. More population means more demand for goods and services. Second, more population means more demand for housing in a context where there is already a shortage. Also, more population does not necessarily improve GDP per capita. »
Integration capability
In this context, it is necessary to make a “fine and sharp” analysis to determine Canada’s integration capacity, specifies Mr. Jean in an interview after the conference. Think tanks and political parties put forward different figures, sometimes at odds, but the economist believes that we remain “in the dark” in this regard. “It deserves an in-depth analysis with the use of an econometric model. »
Mr. Jean, however, has a reservation about the federal government’s objective of welcoming 500,000 immigrants per year by 2025, particularly because of the insufficient supply and construction.
For the moment, we are not managing to build enough housing in Canada, warns the economist. The Mouvement Desjardins estimates that approximately 350,000 housing units should be built per year to avoid making the real estate market more unaffordable. “We are not far from 200,000 [mises en chantier]. We see that we are awfully far from the mark. »
The solution to the scarcity of labor must also go through an increase in productivity. In this regard, Canada is doing poorly, worries Mr. Jean. Investments in intellectual property increased by 12.6% in Canada between 2012 and 2022. In the United States, this figure is 99.3%.
“What worries me is that everywhere in the world, we are facing labor challenges, we are aiming to accelerate automation. There are countries that are going to be the first in the race. They will be able to produce in certain areas at a much more advantageous cost. »
Inflation and policy rate
During his conference, Mr. Jean commented on the most recent data on inflation, released the day before. “The downward trend that we have had in the last nine months may be starting to run out of steam. We went from 4.3% to 4.4%. »
For the moment, the chief economist maintains his forecasts. “We expect the key rate to be stable at 4.5% until December and the Bank of Canada to start lowering rates gradually. »
This gradual decline would contrast with the “muscular” efforts made by central banks to revive the economy after a recession, he underlines. “We are talking about bringing interest rates to a neutral level. This means that the recovery will be quite slow after all. »