Immigration Slowdown Slams Brakes on Population Growth

By Mata Press Service

Canada’s sharp immigration slowdown has pushed population growth to its weakest rate in more than a century, marking a dramatic reversal from the record influx of newcomers that reshaped the country after the pandemic.

Statistics Canada estimates the country’s population reached 41.8 million on July 1, 2026, an increase of just 189,425 people, or 0.5 per cent, from a year earlier.

It was the lowest percentage increase since 1915-16 and the smallest annual increase in the number of people since 1944-45. Statistics Canada said the rapid change in population growth since 2020 has been driven almost entirely by international migration.

The numbers show Ottawa’s efforts to rein in immigration are now having a measurable demographic impact.

The number of non-permanent residents, including international students and temporary foreign workers, fell by 154,614 over the year to 2.78 million.

That was the largest annual decline since comparable records began in 1971-72.

The biggest drop was among study permit holders, whose numbers fell by 140,827, while the number of people holding both work and study permits declined by 81,163.

Permanent immigration is slowing as well.

Canada admitted 368,224 new permanent immigrants during the year ending July 1, down for a fourth consecutive year and below 400,000 for the first time since 2021-22.

Statistics Canada said the decline was consistent with lower federal immigration targets.

The shift has taken Canada from extraordinary population growth of 2.8 per cent in 2023-24 to just 0.5 per cent two years later.

BMO senior economist Robert Kavcic described the latest numbers as a significant economic adjustment after years when population growth outpaced the country’s ability to add housing and productive capacity.

“We’re seeing 0.5% population growth, which is still a major shift from the last couple years,” Kavcic said following the release of the latest Statistics Canada figures.

Kavcic said the post-pandemic experience demonstrated the Canadian economy could not easily absorb population growth exceeding three per cent and described the slowdown as a “necessary adjustment.”

But the immigration retreat comes with consequences.

Rapid population growth helped drive headline economic growth because more people meant more workers, consumers and demand for housing and services. Slower population growth removes part of that support.

Capital Economics has warned that lower immigration will weigh on Canadian economic growth.

Stephen Brown, the firm’s deputy chief North America economist, said Ottawa’s commitment to reducing the temporary resident population was significant and projected that, if the government achieved its targets, Canada’s population could come close to flatlining for a period.

Capital Economics has separately identified lower immigration as one of the factors restraining Canadian economic growth, alongside trade uncertainty.

The impact is particularly significant because immigration has become central to Canada’s labour supply.

Federal data show immigrants, including permanent and non-permanent residents, accounted for 25 per cent of construction workers in 2025, 45 per cent of workers in transportation and warehousing, 44 per cent in accommodation and food services and about one-third of health-care workers.

That creates a difficult balance for policymakers.

Fewer newcomers reduce the number of workers competing for jobs at a time when unemployment has been elevated, but sustained reductions could aggravate labour shortages in industries already heavily dependent on immigrant workers.

Ottawa acknowledged that tension in its latest immigration plan, saying immigration levels must respond to housing and infrastructure pressures while continuing to fill labour shortages in sectors including health care, construction and agriculture.

Housing is another area where the immigration slowdown is already being felt.

The unprecedented increase in population following the pandemic placed intense pressure on rental markets and housing supply, particularly in major cities.

Lower population growth is now reducing some of that demand.

CIBC deputy chief economist Benjamin Tal said earlier this year that weaker population growth was already affecting housing markets that had previously remained relatively strong.

“Alberta and the rest are starting to slow down, clearly because of lower population growth,” Tal said in March while assessing housing conditions across the country.

The federal government has explicitly argued that reducing temporary immigration will relieve pressure on housing, health care and infrastructure.

Under its 2026-2028 Immigration Levels Plan, Ottawa cut its target for new temporary resident arrivals from 673,650 in 2025 to 385,000 this year and 370,000 annually in 2027 and 2028.

The government is aiming to reduce temporary residents to less than five per cent of Canada's population by the end of 2027.

Permanent resident admissions are targeted at 380,000 annually through 2028.

Temporary residents still accounted for 6.7 per cent of Canada's population as of July 1, according to Statistics Canada, down from a peak of 7.2 per cent in October 2024.

The slowdown is also beginning to accelerate another demographic challenge.

During the years of exceptional immigration, the arrival of large numbers of younger workers and international students temporarily slowed the aging of the population.

That effect is reversing.

Canada's median age rose to 40.9 years on July 1, while the average age increased to 42.1 years.

The number of people aged 20 to 24 fell by 63,838 over the year, while the population aged 25 to 29 declined by 91,135.

Altogether, Canada lost almost 155,000 people in their 20s.

That has longer-term implications for the size of the workforce, government revenues and demand for health and retirement services as baby boomers continue moving into older age groups.

The Bank of Canada has also identified slower population growth and aging as structural forces that can restrain labour supply and domestic demand.

The demographic slowdown is uneven across the country.

Alberta remained Canada's fastest-growing province, expanding 1.5 per cent over the year, followed by New Brunswick and Saskatchewan at one per cent.

The country's three largest provinces grew more slowly than the national average.

Ontario increased just 0.3 per cent, Quebec 0.2 per cent and British Columbia 0.1 per cent.

Statistics Canada said the three provinces tend to receive the largest share of international migrants and are therefore more exposed to changes in immigration levels.

The federal government says the reduced immigration targets are intended to bring population growth back into line with Canada's ability to provide housing, infrastructure and public services while directing a larger share of permanent immigration toward economic needs.

The latest numbers show that adjustment is well underway.

After several years in which immigration powered one of the fastest population expansions in the developed world, Canada is entering a very different demographic period.

The immediate relief may be felt in housing demand and competition for jobs.

The longer-term test will be whether Canada can generate stronger productivity, investment and economic growth with a population and labour force expanding much more slowly.