In my 2018 return I have selected unused capital loss to be used for the year 2016. Will the 2016 return automatically updated and I get refund? OR I have file amendment?

You will have to adjust your 2016 return. You can make the adjustments through the CRA's My Account service. https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html

As it was indicated in 2018 return to use the unused capital loss in the 2016 return, CRA reassessed 2016 return without any further action from the tax payer