Quebec’s Aerospace Expected To Struggle Even As Economy and Immigration Bounce Back

Last Updated on March 8, 2021

The global COVID-19 pandemic and the closure of Canada’s borders to almost all non-essential travel cut immigration to Quebec by more than a third last year and took a serious toll on its economy.

Economic activity in Canada’s francophone province dropped sharply during the pandemic, driving its real GDP down by 5.2 per cent and pushing employment down 4.6 per cent last year, reports TD Economics.

That’s expected to turn around this year. 

TD Economics is forecasting real GDP growth of five percent and a rise in employment of 5.1 per cent this year in Quebec.

“Wages in the province are relatively low on average, which is enhancing the impact of federal income support programs, as these programs have a minimum payment threshold,” notes the bank in its economic outlook.

“In addition, households in Quebec are less indebted than their counterparts in other provinces, and savings rates were comparatively high even before the pandemic. These healthy fundamentals will likely support spending through (this) year.”

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Although the province’s aerospace sector will likely still struggle from the downturn in air travel this year, economic recoveries in the other Canadian provinces and the rest of the world are expected to boost Quebec’s manufacturing sector. 

“Robust government program spending should lift growth in the first half of next year,” notes TD Economics.

Largest Contraction Since 1945

At the Business Development Bank of Canada, Pierre Cléroux, the national development bank’s vice-president of research and its chief economist, is forecasting that the Canadian economy will rebound this year after the COVID-19 contraction of 2020. 

“After the largest economic contraction since 1945 (a dip we estimate at 5.5 per cent of GDP), the economy should grow sufficiently to largely offset the losses of 2020,” forecasts Cléroux.

“Strong consumption and a rebound in exports will give the Canadian economy a boost. Bringing forward government investment projects should also provide a tailwind to Canadian economic growth.”

In step with that drop in economic activity and the pandemic, immigration to Quebec also took a sharp dive last year. 

Business Programs Hardest Hit

Immigration, Refugees and Citizenship Canada’s figures for last year show 37.9 per cent fewer foreign nationals became new permanent Canadian citizens in Quebec last year, only 25,195, compared to 40,565 in 2019.

Hardest hit by the drop in immigration to Quebec last year were the business immigration programs, which include those coming to the province under the Quebec Immigrant Investor Program, Quebec Entrepreneur Program, and the Quebec Self-Employed Program.

Last year, 67.4 per cent fewer people became new permanent residents to Canada under business immigration programs in Quebec than had the previous year. Quebec paused the popular QIIP last year as it assesses the terms of the program.

Family Sponsorship programs resulted in 1,920 fewer new permanent residents to Quebec in 2020, a drop of 19.8 per cent from the 9,685 who had come to the province under those programs in 2019.

Economic immigration dropped 44.8 per cent, to 12,775 from 23,130 the previous year, as those able to come to Quebec under the Canadian Experience, Caregiver, and Skilled Worker programs fell off markedly. 

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.