Canada, long known for its open-door immigration policies and booming population growth, is experiencing a dramatic and historic reversal. For the first time in decades, the country’s population declined, shedding over 76,000 residents between July and October. This sharp contraction, confirmed by Statistics Canada, marks a significant pivot in the nation’s demographic trajectory, driven primarily by a decisive immigration cap implemented by the federal government. The era of rapid expansion seems to be yielding to a new chapter of controlled growth, or even contraction, with profound implications for Canada’s economy and society.
The latest figures reveal a staggering 0.2% drop in Canada’s population during the third quarter of 2025, a phenomenon not witnessed since the height of the COVID-19 pandemic in 2020, and even more remarkably, the sharpest quarter-over-quarter decline on record dating back to the 1940s, as noted by Bank of Montreal senior economist Robert Kavcic. This population decline is predominantly attributed to a significant reduction in non-permanent residents, particularly international students and temporary foreign workers. These groups, once key drivers of growth, saw their numbers fall to an unprecedented degree since comparable records began in 1971. In October, non-permanent residents constituted approximately 6.8% of the total population, numbering over 2.8 million, but their recent decrease has reshaped the demographic landscape.
This dramatic shift comes on the heels of Ottawa’s new goal to restrict temporary residents to just 5% of the total 41.6 million population by 2027. It’s a stark contrast to just a few years ago when Canada actively sought to attract over a million newcomers annually to alleviate labour shortages. Finance Minister François-Philippe Champagne articulated the government’s new stance: “We needed to bring our immigration level to a more sustainable level.” Speaking from Berlin, Champagne emphasized the objective to “take back control over our immigration system and find a better balance between our capacity to welcome people and the number of people who want to come to the country.” This marks a deliberate effort to recalibrate the nation’s approach to population growth.
The previous strategy of high immigration, while boosting the labour force, had inadvertently created considerable domestic challenges. The surge in newcomers, which accounted for approximately 97% of Canada’s population growth by 2023, was increasingly blamed for exacerbating the affordability crisis, particularly in the housing market. Furthermore, it placed immense stress on social services and contributed to rising youth unemployment rates. Former Prime Minister Justin Trudeau, who initially championed ambitious immigration targets, eventually acknowledged that his government “didn’t get the balance quite right” post-pandemic. His administration announced initial cuts to slow population growth, a path continued and amplified by Prime Minister Mark Carney.
Under the current immigration policy, Ottawa is now targeting a significant reduction in new temporary residents. The aim is to cut targets from 673,650 to 385,000 next year, further decreasing to 370,000 in 2027 and 2028. This comprehensive immigration cap signals a long-term commitment to a more measured approach to population management. The impact of these policies is already evident across the country, with provinces like Ontario and British Columbia experiencing the most significant drops in population. Conversely, only Alberta and the remote territory of Nunavut managed to see their populations grow, highlighting the localized effects of the national policy shift.
Canada is navigating a pivotal moment in its demographic history. The recent population decline, driven by a recalibrated immigration policy and stringent immigration cap, signifies a conscious effort by the government to address the socio-economic pressures that arose from rapid growth. While the long-term consequences of this shift are yet to fully unfold, it represents a departure from decades of growth-oriented strategies. As Statistics Canada continues to monitor these trends, the nation watches to see how this demographic pivot will reshape its future, balancing economic needs with the capacity to sustainably welcome newcomers. The debate over the ideal balance between growth and sustainability will undoubtedly continue to be a central theme in Canadian public discourse.
