Is Canada's Population Decline Linked to Immigration Limits?

Canada's recent population decline of 76,068 between July and October 2025 marks a significant shift from years of rapid growth, primarily due to stricter immigration policies targeting non-permanent residents. This contraction has raised concerns about its implications for the economy, especially following a period where immigration was crucial for labour market stability.

Last updated: 10 October 2023 (BST)

What’s happening now

Statistics Canada reported a notable population decline of 0.2% in the third quarter of 2025, the first decrease since the onset of the Covid-19 pandemic in 2020. This contraction is attributed largely to a significant drop in non-permanent residents, particularly international students and temporary foreign workers. As of October 2025, these non-permanent residents numbered over 2.8 million, representing approximately 6.8% of Canada's total population. This shift comes amidst a backdrop of policy changes aimed at curbing immigration rates to achieve a more sustainable balance between the number of newcomers and the nation's capacity to support them.

Key takeaways

• Canada's population decreased by 76,068 between July and October 2025, marking a historic decline.
• The drop is primarily due to a reduction in non-permanent residents following new immigration policies.
• Temporary residents will be limited to 5% of the total population by 2027, significantly down from previous years.

Timeline: how we got here

To understand the current situation, it's essential to look at key milestones leading to the population decline:

• 2022: Canada experienced a population growth of over one million, primarily driven by immigration to address labour shortages.
• 2023: The government started implementing policies to reduce immigration levels significantly.
• July 2025: The population was reported at 41.6 million, following substantial growth from immigration.
• October 2025: Statistics Canada announced a 76,068 decrease in population, primarily attributed to fewer non-permanent residents.

What’s new vs what’s known

New today/this week

The most recent figures indicate that the population has decreased for the first time since the pandemic, marking a dramatic shift in Canada's demographic landscape. The decline has raised alarms among economists and policymakers regarding the potential long-term impacts on the economy.

What was already established

Prior to this decline, Canada had been experiencing robust population growth, largely facilitated by immigration policies aimed at alleviating labour shortages. The previous government under Justin Trudeau promoted high immigration levels, which have now been curtailed due to growing concerns over housing affordability and social service pressures.

Impact for the UK

Consumers and households

For UK readers, the implications of Canada's population shift may offer insights into potential challenges related to immigration policies. A significant reduction in newcomers could lead to tighter labour markets, impacting wages and employment opportunities, as well as affecting the availability of goods and services.

Businesses and jobs

Businesses in Canada are likely to face challenges due to a shrinking workforce. Companies that rely on temporary foreign workers may find it increasingly difficult to fill positions, particularly in sectors that have been historically dependent on immigrant labour. This could lead to increased competition for jobs among local residents.

Policy and regulation

The Canadian government's approach to immigration is shifting, with a clear focus on sustainability. This may serve as a cautionary tale for other countries, including the UK, as they navigate the balance between welcoming newcomers and addressing the concerns of current residents regarding resource allocation.

Numbers that matter

• 76,068: The total population decrease in Canada between July and October 2025.
• 2.8 million: The number of non-permanent residents in Canada as of October 2025.
• 41.6 million: Canada’s total population prior to the recent decline.
• 5%: The government’s target for temporary residents as a proportion of the total population by 2027.
• 97%: The percentage of Canada’s population growth attributed to immigration in 2023 before the policy changes.

Definitions and jargon buster

• Non-permanent residents: Individuals residing in Canada temporarily, such as international students and temporary foreign workers.
• Immigration policy: Government regulations governing the entry and residence of foreign nationals in a country.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, watch for more detailed analysis from Statistics Canada on the implications of this population decline. Economic indicators related to employment, housing, and social services may also be closely monitored by policymakers.

Medium term (1–6 months)

Expect further discussions around immigration policy, particularly as the government aims to balance the needs of the economy with public sentiment regarding resource allocation and housing affordability.

Signals to watch

• Trends in employment rates and job vacancies across sectors.
• Changes in housing prices and availability in key urban areas.
• Future immigration target announcements from the federal government.

Practical guidance

Do

• Stay informed on local and national employment trends.
• Consider the impacts of immigration policy changes on your industry.

Don’t

• Ignore the potential impact of population changes on consumer behaviour.
• Assume that past trends will continue without considering current policy adjustments.

Checklist

• Review your business’s reliance on temporary foreign workers.
• Assess the local job market for emerging opportunities.
• Monitor housing market trends in your area.
• Stay updated on federal immigration policy changes.
• Engage with local community discussions regarding immigration and resource allocation.

Risks, caveats, and uncertainties

While the decrease in population is significant, it is essential to approach these numbers with caution. The long-term impacts of reduced immigration are still uncertain, and future adjustments to immigration policy may alter the current trajectory. Economic conditions, including job availability and housing market fluctuations, can also significantly affect demographic patterns.

Bottom line

The recent decline in Canada’s population underscores the complexities of immigration policy and its direct impact on the economy. As the country moves towards more sustainable immigration levels, the results of these changes will be pivotal for both current residents and potential newcomers. Observing Canada's experience may provide valuable lessons for other nations grappling with similar challenges.

FAQs

What caused the recent decline in Canada’s population?

The decline was primarily driven by a reduction in non-permanent residents, including international students and temporary foreign workers, following new immigration policies aimed at balancing immigration levels with the country's capacity.

How does this population change affect the economy?

The decrease may lead to tighter labour markets, impacting job availability and wages, and could result in increased competition for resources like housing and social services.

What are the long-term implications of these immigration policies?

Long-term implications could include a potential decrease in workforce availability, challenges for businesses relying on immigrant labour, and shifts in demographic trends that may require policy reassessment.