Immigration in 2021 is likely to see 275,000 new permanent residents as COVID-19 headwinds continue, falling short of new 401,000 target.
Immigration into Canada slowed significantly in 2020 following restrictions limiting travel across the international border. Only 184,000 new permanent residents entered Canada in 2020, just over 50% of the 341,000 that was targeted at the beginning of the year. Temporary immigration, both of international students and workers on temporary work permits declined as well. Combined, this led to a decline in net international migration in the third quarter resulting in Canada’s lowest quarterly population growth on record (an increase of only 2,767).
In response, the federal government renewed its commitment to maintaining high levels of immigration, announcing new targets for 2021 through 2023 that could see over 1.2 million new permanent residents settled over this period, fully making up for the 2020 shortfall. However, announcing these targets, especially for 2021, may be putting the cart in front of the horse as strong headwinds limiting the number of newcomers are still in play.
Application, approvals, and admissions all declined significantly in 2020
Source: Statistics Canada, RBC Economics
- Border restrictions remain in effect into the foreseeable future: With few exceptions, only those who are the immediate or extended family of Canadians or permanent residents may enter the country. Coupled with significant quarantine requirements, travelling to Canada may not be feasible for many potential immigrants. Furthermore, many new permanent residents will continue to be those who are already in the country, and so we should also expect even smaller population growth than these levels would normally imply.
- Processing delays continue and are significant: IRCC has been prioritizing family/spousal reunions (consistent with border restrictions) and express entry applicants under skilled work programs, but while processing capacity has improved since the beginning of the pandemic, results are not promising. For example, the Canadian Experience Class applicants still face a 6 months lag time even before processing starts. Only those received before the week of August 12, 2020 are currently under review. For others, the government has indicated waits could be significantly longer.
- Permanent residency applications are down: The number of new applicants for permanent residency has decline significantly – on pace for less than 50% of 2019 levels in the second half of the 2020. And other categories such as family sponsorship continue to lag significantly behind. Coupled with processing delays, this implies that even if borders open up soon, it will still take time to increase the flow of new immigrants back to pre-pandemic levels.
- Backlog is unlikely to be a significant source once borders open up: There is only a small gap between new permanent residents in 2020 and authorizations and visas issued (approximately 8,000 since October), suggesting no big catchup when borders re-open of those approved for permanent residency, but delaying their entry until borders re-open.
In the long-run, Canada does have the capacity to hit the ambitious targets set out last fall and population growth from new immigration will again return as the main driver. However, with the effects of the pandemic looking more likely to remain into the spring and summer, the headwinds listed above will keep immigration into Canada low throughout most of 2021.
We expect the first half of 2021 to look much like the latter half of 2020, with approximately 100,000-125,000 new permanent residents. This implies that to hit the 401,000 target, Canada would need to admit nearly 50,000 new permanent residents per month in the second half of the year which is 14,000 more than the highest month in 2019. This seems unlikely. A more realistic estimate, if things return to normal with respect to COVID-19, would be 150,000-175,000 new permanent residents in the latter half, leaving Canada with about 275,000 new permanent residents by year’s end.
Andrew Agopsowicz is a Senior Economist working in both the Economics and Thought Leadership groups. He studies the labour market – largely focusing on the future of work, demographic change, diversity, and human capital. Before joining RBC, Andrew was a Senior Economist at the Bank of Canada.
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