Economy
Canada Records First Population Decline Since 1940s as Federal Immigration Policy Shifts
Canada records its first annual population decline since the 1940s, driven by a reduction in temporary residents and stricter federal immigration targets.
A Historic Demographic Shift
In a landmark shift for Canadian demographics, Statistics Canada has reported the first annual population decline since records began in the 1940s. The country’s population decreased by 103,504 people between October 1, 2025, and January 1, 2026, representing a 0.25 per cent drop. This downturn follows a period of unprecedented growth and marks a significant turning point in the nation’s approach to immigration and temporary residency.
The Impact of Temporary Resident Policies
The primary driver behind this contraction is a substantial exodus of non-permanent residents, a group largely composed of international students and foreign workers. This demographic saw a dramatic reduction of over 171,000 individuals in the final quarter of 2025 alone. The current total of temporary residents sits at 2.67 million, or 6.4 per cent of the total population, as the federal government aggressively pursues a target of 5 per cent by the end of 2027.
These figures are the direct result of a series of measures introduced by Ottawa throughout 2024 and 2025 intended to curb the rapid influx seen during the post-pandemic era. At its peak in October 2024, temporary residents accounted for 7.6 per cent of the Canadian population, fueling debates over housing availability and infrastructure capacity.
Normalization and Economic Outlook
While the decline in temporary residents has been sharp, the federal government has also moved to reduce permanent resident admissions, which fell by nearly 20 per cent year-over-year. Despite this, new permanent immigrants provided a vital buffer that prevented an even steeper population drop. Economists suggest that Canada has entered a period of ‘normalization’ following years of volatile growth.
Robert Kavcic, senior economist at Bank of Montreal, noted that population growth is expected to remain near zero through 2027. This stabilization is viewed by some as a necessary cooling period for the Canadian economy, allowing for a better alignment between population numbers and the delivery of essential services like healthcare and housing. However, the long-term impacts on the labor market remain a subject of close observation for policymakers and business leaders alike.