Statistics Canada recently released the latest population estimates (for 2026 Q1), broken out by the different factors that cause Canada’s population to grow or contract. These numbers show that the contraction in population observed in 2025 continued into early 2026.
In 2022 and 2023, Canada recorded exceptional levels of population growth. Total annual population growth rose from 936,000 in 2022 to a peak of just over 1.2 million 2023. This trajectory shifted noticeably in 2024 and by 2025, the trend reversed into a net population contraction: over the course of 2025, Canada’s population decreased by just over 100,000. This downward trend persisted into the first quarter of 2026, which saw a further reduction of 55,000 in Canada’s population.
The above chart clearly illustrates this transition. It also reveals the main drivers of the trend reversal: the contraction was fundamentally driven by a drop in arrivals and a simultaneous increase in departures within the non-permanent resident category. Meanwhile, natural population change (the balance of births and deaths) played a minimal role in the overall volume of population shifts: natural change contributed no more than 35,000 to population growth in any given year.
The shift in non-permanent resident volumes reflects a significant recalibration of Canadian immigration policy. The primary driver of this demographic shift was the federal government's March 2024 directive to establish a formal cap on temporary residents, aiming to reduce their proportion to 5% of Canada’s total population within three years. This target was supported by specific policy and legislative changes across several key areas, which included revisions to the International Student Program, adjustments to the Temporary Foreign Worker Program, and narrowing of Spousal Open Work Permit eligibility.
One of the key objectives of the change in policy was to alleviate pressure on the housing market and there is some evidence of stabilization in this sector: according to TD Economics, rent growth for purpose-built rentals has decelerated significantly, normalizing to an estimated 3% to 3.5% in 2026, which is roughly half the growth rate observed during the 2024 peak. The secondary rental and investor condo markets in major urban centers have cooled as well, leading to increased vacancy rates and downward pressure on asking rents.
While some economists note that the immigration dial-back may have mitigated an increase in the unemployment rate, some sectors that rely more heavily on Temporary Foreign Workers (e.g., agriculture, hospitality, retail, and long-term care homes) have reported operational challenges. Additionally, the implementation of the cap on international study permits has triggered an immediate fiscal recalibration within higher education. Post-secondary institutions across Canada are projecting significant budgetary shortfalls, with several institutions tracking multi-million dollar deficits. To offset the sudden loss of high-yield international tuition revenue, many institutions have initiated hiring freezes, deferred infrastructure upgrades, cancelled specialized programs, or announced staff layoffs.
Ultimately, the latest demographic data reflects a deliberate transition away from the demand-driven population increases of the early 2020’s toward a more regulated model of managed growth. While there is evidence that the contraction in non-permanent residents is effective at addressing its immediate objective of easing acute demand-side pressures on housing and infrastructure, it has simultaneously introduced new challenges for others, including the post-secondary sector and labor-dependent industries.
As Canada advances through 2026 toward its 5% temporary resident target, the overarching challenge for federal and provincial policymakers will remain a delicate balancing act: sustaining the long-term benefits of public infrastructure stabilization while mitigating any negative impacts of a contracting population. This will require collaboration between the federal and provincial governments to fine-tune immigration targets for sectors that rely more heavily on Temporary Foreign Workers, as well as to assess what additional supports are required, particularly for the post-secondary sector.
1 https://economics.td.com/ca-dial-back-of-immigration-intended-impacts