As Immigration Levels Rise, Ontario’s Economy Forecast To Roar Back In 2021

As COVID-19 closed the Canadian border to non-essential travel and crippled many Ontario businesses in 2020, immigration to the province dropped to barely half of what it had been the previous year.

Economic activity in Canada’s most populous province tanked during the first and second waves of the global pandemic, pushing its GDP down by 6.2 per cent in 2020, reports TD Economics.

That’s expected to turn around this year. TD Economics is forecasting GDP growth of 5.6 per cent and a rise in employment of 5.7 per cent this year in Ontario.

“After decelerating further in the first quarter of 2021, growth prospects are considerably improved, as confidence and spending responds to a rollout of a vaccine,” the bank forecasts.

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“Another plus for the outlook includes (General Motor)’s decision to return truck assembly to its Oshawa plant, after production was halted in December 2019. In preparation for a return to production in January 2022, the automaker plans to invest around $1 billion to retool its plant.”

TD Economics is expecting a stronger rebound in Ontario than in the rest of Canada this year due, in part, to the pent-up demand accumulated during last year’s downturn.

Major Growth Forecast For Ontario

At the Business Development Bank of Canada (BDC), Pierre Cléroux, the national development bank’s vice-president of research and its chief economist, is not quite as bullish on Ontario. But he too is forecasting a strong resurgence for the province this year. 

He makes particular note that a return to higher levels of immigration will help Ontario’s economic recovery this year.

“Ontario, which had the strictest health restrictions in 2020, could experience the country’s strongest economic growth in 2021,” forecasts Cléroux. 

“New investment in the automotive manufacturing sector is expected to give an additional boost to the province’s manufacturing sector. A resurgence in immigration should also revitalize the economy, particularly in the Greater Toronto Area. Growth of 4.5 per cent is expected in Ontario.”

In step with that drop in economic activity and the pandemic, immigration to Ontario also fell precipitously in 2020. 

Business Programs Hit Hardest

Immigration, Refugees and Citizenship Canada’s figures for last year show 46 per cent fewer foreign nationals became new permanent Canadian citizens in Ontario last year, only 82,850, compared to 153,395 in 2019.

Hardest hit by the drop in immigration to Ontario last year were the business immigration programs, which include those coming to the province under the Ontario Entrepreneur stream, the Start-Up Visa program, the Immigrant Investor Venture Capital program, and the Federal Self-Employed Class.

Last year, 59 per cent fewer people became new permanent residents to Canada under business immigration programs in Ontario than had the previous year. 

Family Sponsorship programs resulted in 20,420 fewer new permanent residents to Ontario in 2020, a drop of 47.9 per cent from the 42,570 who had come to the province under those programs in 2019.

Economic immigration dropped 47.1 per cent, to 43,455 from 82,145 the previous year, as those able to come to Ontario under the Canadian Experience, Caregiver, Skilled Trade and Skilled Worker programs fell off markedly. The only worker program to see an uptick in that province last year was the newly-launched Rural and Northern Immigration Program. 

Ottawa remains firmly committed to boosting immigration again with much more ambitious targets for this year and the next two.

Immigration Minister Marco Mendicino announced late last year that Canada was going to greatly increase immigration levels to make up for the shortfall in 2020 due to the COVID-19 pandemic.

Ottawa Bullish On Immigration

Under the new plan, Canada is planning to welcome more than 1.2 million newcomers between 2021 and 2023 with 401,000 new permanent residents to Canada in 2021, 411,000 in 2022 and 421,000 in 2023.

Prior to the coronavirus pandemic, the previous plan set targets of 351,000 in 2021 and 361,000 in 2022.

“Immigration is essential to getting us through the pandemic, but also to our short-term economic recovery and our long-term economic growth,” said Mendicino. “Canadians have seen how newcomers are playing an outsized role in our hospitals and care homes, and helping us to keep food on the table.

“As we look to recovery, newcomers create jobs not just by giving our businesses the skills they need to thrive, but also by starting businesses themselves,” he said. “Our plan will help to address some of our most acute labour shortages and to grow our population to keep Canada competitive on the world stage.