Canada has recorded one of its most significant population drops in recent history, with new data revealing a dramatic reversal of the country's long-standing growth strategy tied to high immigration.
A Historic Quarterly Decline
According to estimates released by Statistics Canada, the national population fell by 0.2% in the third quarter of 2025, decreasing from 41.65 million on 1 July to 41.6 million. This marks only the second quarterly decline on record; the first occurred in 2020 and was attributed to Covid-19 border restrictions.
The recent downturn is largely a direct consequence of the federal government's concerted effort to reduce the influx of international students. Under Prime Minister Mark Carney, Ottawa has moved decisively to curb the number of study permits issued, a sharp policy shift from the record-level immigration seen during former Prime Minister Justin Trudeau's tenure.
Policy Shift and Target Numbers
The Liberal government's new approach aims to substantially reduce the share of non-permanent residents, which currently stands at 6.8% of the total population, down from 7.3% last quarter. Prime Minister Carney has pledged to lower this figure to just 5% by the end of 2027.
A central pillar of this plan involves slashing international student permits. The targets have been set to halve new arrivals, from 305,900 in 2025 to 155,000 in 2026, and 150,000 in each of 2027 and 2028. Concurrently, the government plans a modest increase in permanent resident admissions, anticipating 395,000 in 2025, 380,000 in 2026, and 365,000 in 2027.
Finance Minister François-Philippe Champagne summarised the rationale, stating Canada had "exceeded our capacity to welcome" and provide adequate services to newcomers in recent years.
Economic Repercussions and Provincial Impact
Economists are closely watching the demographic shift. Robert Kavcic, an economist at the Bank of Montreal, described the "major population adjustment" as one of the biggest economic stories in Canada. He noted that to hit the non-permanent resident target, population growth would need to run barely above zero through 2028.
Kavcic argued the previous explosion in growth—which saw nearly 1.3 million people added within a year—contributed significantly to economic pressures, including housing and service inflation. Early signs of the decline's impact include a weakening rental market and less pressure on services inflation.
The population decrease was felt nationwide, with every province and territory reporting declines except for Alberta and Nunavut, which both saw increases of 0.2%.
This new data signals a profound transformation for a nation whose economic model has been intrinsically linked to robust population growth, now navigating the complex consequences of a deliberate slowdown.
