Global Migration: Trends and Economic Impact

Key Themes and Impact

• Immigration as Economic Driver: Immigration stimulates both supply and demand in economies. For more than 50 years, it has contributed approximately 0.3% annually to the economic growth of wealthy nations.

  • Supply Side: More labor leads to increased productivity and encourages capital investment.
  • Demand Side: Immigrants spend money on necessities like food, housing, and transportation, boosting local economies.
  • Remittances: In developing countries, money sent back home by immigrants significantly contributes to GDP.

• Economic Contributions:

  • In 2020, immigration added a net positive of $4.35 trillion to global GDP.
  • Restrictive immigration policies, particularly in the U.S., may hinder economic growth globally.

Regional Focus

United States and Europe

• United States:

  • Elevated immigration levels in 2024 facilitated employment growth without excessive inflation.
  • Stricter policies could reverse this trend, with GDP growth projected at 1.9% in 2025 and 1.3% in 2026.

• Europe:

  • A 6.4% decline in the working-age population by 2040 could reduce GDP by 4%.
  • Migration is seen as a critical solution to counteract demographic challenges and boost growth.

• Additional Strategies:

  • Raising retirement age and closing gender labor participation gaps could add substantial GDP gains.

Asia and Other Regions

• Japan and South Korea:
  • Japan has relaxed visa restrictions to attract foreign workers amidst labor shortages.
  • South Korea is offering incentives to attract high-skilled migrants.

Migration's Long-term Influence

• Demographic Challenges: Aging populations and declining workforces in wealthy countries underscore the importance of immigration.
• Population Growth:
  • Australia, Canada, New Zealand, and Sweden have seen significant population growth due to immigration.
  • Countries like India and China have the largest net emigration rates, while the U.S. and EU see the highest net inflows.

Economic and Policy Implications

• Inflation:

  • The impact is complex and depends on immigrant composition.
  • Working-age immigrants in the U.S. help control inflation, whereas higher demand without sufficient labor supply can boost inflation.

• Policy Considerations:

  • Policymakers must balance immigration to sustain economic growth amid longevity issues.
  • Abrupt policy tightening could harm economies reliant on immigration for workforce stability.