Canada Population Drops 0.2% in Third Quarter in First Decline Since Pandemic

Pedestrians in Toronto. Photo by Cole Burston /Bloomberg

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(Bloomberg) — Canada’s population fell by 0.2% in the third quarter to stand at 41.6 million, marking the only quarterly decline on record outside the Covid-19 era and a dramatic shift from explosive post-pandemic immigration growth.

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The decrease was led by a record drop in non-permanent residents, Statistics Canada reported Wednesday. Prime Minister Mark Carney has continued a policy introduced by his predecessor to shrink the number of foreign students, temporary workers and asylum-seekers in the country after their numbers ballooned in 2023 and 2024.

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In the third quarter, the population grew just 0.2% from a year earlier, the lowest on record in data going back to 1947. That contrasts with a 3.2% annual rate in 2023, on par with some developing countries with high birth rates. 

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Following the pandemic, Canadian colleges recruited massive numbers of foreign students, largely from India, pushing the country to a point where one in 40 people was an international student permit-holder. The rapid growth strained housing and services, causing public support for immigration to fall to multi-decade lows. 

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Then-Prime Minister Justin Trudeau, whose popularity took a deep hit on the immigration backlash, announced a plan in late 2024 to shrink Canada’s population by 0.2% annually in 2025 and 2026, before rebounding to modest growth in 2027. He promised to reduce the share of temporary residents to 5% of Canada’s population.

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Carney, in his immigration plan released last month, further slashed the levels of temporary residents allowed in the country for the next three years and made deeper cuts to study permits. At the same time, however, he promised C$1.7 billion ($1.2 billion) to recruit international researchers and a new pathway to lure H-1B visa holders.

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As of the third quarter, temporary residents made up 6.8% of Canada’s population, down from a peak of 7.6%.

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The country saw a decline of 176,000 non-permanent residents in the third quarter, the largest drop on record in data going back to 1971. The plunge surpassed decreases in the first and second quarters of this year.

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The Bank of Canada has said it expects weak population growth, as well as elevated unemployment due to the trade conflict with the US, to drive a slowdown in consumer spending in 2026 and 2027. It’s also said the immigration pullback will slow potential growth in coming years, limiting the pace at which the economy can expand without incurring inflation.

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“A major population adjustment is well underway, and it remains one of the biggest economic stories in Canada,” Robert Kavcic, senior economist at Bank of Montreal, said in a report to investors.

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“Among the impacts we’re tracking are: a significant weakening of the rental market, especially with the pipeline chock-full of supply; less pressure on services inflation; easing slack in the youth job market; and a likely pickup in productivity and growth in real gross domestic product per capita.”