One of the concerns raised during the panel discussion was the issue of inflation, which, although expected to decrease from the peak levels witnessed in 2022, is anticipated to remain a challenge for the Bank of Canada.
One of the concerns raised during the panel discussion was the issue of inflation, which, although expected to decrease from the peak levels witnessed in 2022, is anticipated to remain a challenge for the Bank of Canada.
During the 2024 Annual Economic Outlook, a panel discussion hosted by the Economic Club of Canada, chief economists of major Canadian banks convened to provide their economic forecasts for 2024.
They are cautioning that Ontario must swiftly reduce the number of international students at its post-secondary institutions to address inflation, particularly in rental rates. Inflation, which, although expected to decrease from the peak levels witnessed in 2022, is anticipated to remain a challenge for the Bank of Canada.
The era of the Bank of Canada employing ultra-low interest rates to stimulate inflation and achieve its two-percent target, which persisted before and during the pandemic, was described as a “hangover” from the 2008 financial crisis by Doug Porter, Chief Economist at BMO Financial Group.
New normal
Interest rates are anticipated to settle at a “new normal” that is a few percentage points lower than the current overnight rate of five percent, Porter added.
The chief economists of major Canadian banks anticipate a reduction of around 1.5 percentage points in interest rates this year. There is some debate about whether this adjustment would commence in the spring or fall of 2024.
The anticipated reduction is attributed to the Bank of Canada’s need to alleviate the stress imposed on mortgage holders by higher rates.
CIBC’s chief economist, Avery Shenfeld, directly attributed the inflationary pressure on rental rates to provinces reducing funding to universities and post-secondary institutions. “Just charge those immigrant students more,” he said.
Shenfeld further criticized certain schools, describing them as “branch plants” of Ontario colleges located in office buildings in Toronto. He highlighted that these institutions primarily enroll foreign students, framing them as tuition-focused entities rather than traditional educational establishments.
Essential role
In response to Shenfeld’s comments, a spokesperson for Colleges and Universities Minister Jill Dunlop issued a statement acknowledging the essential role that international post-secondary education plays in developing talent, skills, and the future prosperity of the province.
Liz Tuomi, press secretary for Dunlop, stated that the province is currently reviewing the recommendations put forth by a blue-ribbon panel including an immediate 10 percent increase in funding for post-secondary education and ending the tuition freeze.
The review includes considerations for funding colleges and universities in the 2024-25 school year and improving supportive learning environments to prepare students for successful careers.
Improving experience
The government is collaborating with sector partners to identify measures for supporting and enhancing international students’ learning experiences and outcomes in the labor market.
In the province’s yearly pre-budget consultations, the Council of Ontario Universities cautioned that approximately 50 percent of the province’s schools are operating with deficits.
“We need to continue to keep immigration strong but at the same time we need to do a better job of integrating immigrants into the economy, to get them paid for what their education and skill levels are,” said Craig Wright RBC Chief economist.
Unlike numerous other nations, Canada has not faced a significant issue of illegal immigration or an influx of refugees crossing its borders. The country has had the flexibility to formulate its immigration system, which had been functioning effectively until recent times.
Amendments in eligibility criteria
The Ontario government has amended the eligibility criteria for the “Employer Job Offer: International Student Pathway” under the Ontario Immigrant Nominee Program. This change, effective since Jan. 1, marks a substantial shift in the province’s approach to attracting and retaining international talent, particularly those who have completed specific graduate degree programs in Ontario.
The OINP International Student Pathway is designed to facilitate permanent residency for international students who have received a job offer in Ontario. This program is part of Ontario’s broader strategy to address labor shortages in skilled occupations by leveraging the talent pool of international students with Canadian credentials and local work experience.
