Canada’s population took its largest-ever hit in the third quarter, as federal efforts to curb immigration gained traction — a trend that will take some steam out of the economy too, says Desjardins Group.
In a report Wednesday, the firm noted that the Canadian population dropped by 76,000 in the last quarter, marking the largest decline on record. The only other time the population contracted in the past 80 years was during the Covid pandemic.
The decline in the third quarter was driven by a sharp drop in non‑permanent residents (NPRs), led by a reduction in foreign students — the number of study permit holders was down by 143,000 in the quarter, it noted.
“The recent slowdown in NPR numbers suggests that the federal government’s new targets for temporary residents are increasingly taking effect,” the report said, noting that the share of NPRs in Canada’s population dropped to 6.8% in the quarter, down from 7.3% in the prior quarter.
The federal government is aiming for 5% by the end of 2027, which will boost Canada’s output on a per capita basis, and should help relieve some inflationary pressure.
“However, weaker population growth is also poised to act as a drag on the broader economy,” the report said.
“This will add to existing headwinds — from trade policy uncertainty to the mortgage renewal cycle — which are expected to weigh on near‑term growth and the minds of central bankers,” it added.