8  BIS central bankers’ speeches  aggregate demand is expected to be broadly matched by lower growth of the economy’s productive capacity, which in turn follows from less growth in the labour force. While that is what we expect, there is considerable uncertainty about both the rate of population growth and its effects on spare capacity. An example might be helpful here.
Lower immigration may reflect a fall in the number of people coming to Australia who have a relatively high propensity to participate in the labour force, such as New Zealanders of prime working age. In that case, the implications for the economy’s productive capacity will be larger than if lower immigration was mostly due to fewer international students.