08:44 AM EDT, 10/28/2024 (MT Newswires) -- Canada's prime minister and immigration minister last week announced material changes to the country's immigration plans over the next three years, noted Scotiabank.

A pullback in permanent resident admissions, along with a sizeable contraction in non-permanent residents, would drive a modestly negative contraction in population growth, or 0.2%, over the next two years, before returning to positive territory by 2027, 0.8%, said the bank.

There are still "enormous" uncertainties on the economic impacts to be weighed, but a contraction in the labor force would very likely dampen economic activity, although with a wide range of uncertainty around the magnitude, stated Scotiabank.

It isn't yet clear whether supply or demand factors would dominate when it comes to inflation and as a consequence, the interest rate path, pointed out the bank.

A first step in fleshing out these potential impacts is determining possible path(s) for population projections. The aggressive policies set out imply serious implementation risks, but political resolve suggests they shouldn't be dismissed, added Scotiabank.

The bank sets out three plausible population paths that could reasonably unfold over the horizon. They fall somewhere in the range of 0 to 1% annual population growth with Scotiabank's bias towards the mid-range.