The OECD's report underscores the significant impact immigration has had on the economies of several affluent nations, including the US, UK, Canada, Spain, and Australia. This influx of migrants has eased labor market constraints and contributed to GDP growth, according to the organization's analysis. The improved economic outlook, with global GDP expected to increase by 3.1 percent in 2024, is partly attributed to factors such as lower-than-expected inflation, enhanced business confidence, and rising household incomes.
However, there's a noticeable discrepancy between the economic fortunes of the United States and European countries. The US is experiencing robust growth, while the Eurozone's growth remains sluggish, with Germany particularly affected.
Clare Lombardelli, the OECD's chief economist, highlighted the strength of the US economy, indicating signs of divergence from European economies. She suggested that the European Central Bank might have room to lower interest rates sooner than the US Federal Reserve due to the Eurozone's subdued demand outlook.
Lombardelli emphasized the significant role of labor force expansion, attributing part of it to the extraordinary rates of migration. Migration, she noted, contributes positively to productivity, knowledge transfer, and labor mobility, offering long-term solutions to demographic challenges.
Despite the overall positive impact, the OECD cautioned that per capita GDP growth, a measure of living standards, has been weaker than overall GDP growth in some countries, with negative growth observed in 2023 for some nations. Additionally, the influence of migration on wage growth remains uncertain, which is a crucial consideration for central banks concerned about inflationary pressures.
Some economists speculate that the surge in immigration to the US may have contributed to stronger-than-expected job growth. The US Congressional Budget Office reported significantly higher net immigration figures compared to official labor force estimates, indicating the potential understatement of the labor force size.