Hitting the Reset Button: The Impact of Revised Immigration Policies in Australia and Canada

When looking at population growth in recent years, Australia and Canada stand out among advanced economies. Surging populations in both countries were largely driven by immigration. The wave of arrivals was prompted in part by a relaxation of immigration restrictions following the pandemic. The changes resulted in an increase in international students and, in the case of Canada, a pronounced increase in temporary foreign workers. Both countries have recently implemented more restrictive policies, which will have near-term economic implications; however, we expect immigration levels to normalize closer to historical norms over the medium-term. Key highlights include:

-- Australia and Canada have recently experienced rapid population growth driven by a surge of immigration.

-- Both countries have implemented more restrictive policies to put immigration levels on a sustainable footing, with Canada focusing on temporary workers and Australia concentrating on international students.

-- We view these policy measures as a normalization of migration flows, not a new era of restriction.

"We do not anticipate the policy shifts on immigration will materially impact medium-term growth prospects in Canada or Australia relative to the pre-pandemic period," says Julia Specht, Assistant Vice President, Global Sovereign Ratings. "In our view, the recent policy changes in Canada and Australia do not intend to initiate a new era of restrictive immigration, but rather aim to put immigration flows on a more sustainable footing following a massive surge in arrivals in 2023 and 2024. Even with federal elections approaching in both countries this year, we expect that the consensus across the political spectrum on the long-term benefits of immigration will likely endure."