Canada population curbs will be a drag for the loonie

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Canada population curbs will be a drag for the loonie

Canadian Prime Minister Justin Trudeau is fighting for his political life and yesterday he came as close as he ever has to admitting a mistake. His government dropped immigration targets for the next three years by around 20%.

Next year's target will instead be 395,000 new permanent residents, and that will fall to 380,000 in 2026 and 365,000 in 2027.

Much of those will be drawn from temporary workers and foreign students already in the country and as a result, the federal government estimates Canada's population will decline
slightly by 0.2% in 2025 and 2026, before returning to growth of
 0.8% in 2027.

Now those numbers are far from written in stone and are subject to change (potentially downward with an election given public sentiment). However I have a hard time seeing them revised upward.

If you back out Canadian growth, it's declined on a per capita rate in seven of the past eight quarters.

Consumer spending has also fallen on a per capita basis. All that to say that Canada would be in a recession if not for massive population growth.

Well that's coming to an end at a time when the housing market is also struggling and any new government is highly likely to cut public spending.

Add it up and USD/CAD is thinking about breaking a series of post-pandemic highs ranging from 1.3900 to 1.3975.

                This article was written by Adam Button at www.forexlive.com.

Source: Canada population curbs will be a drag for the loonie

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