Key Takeaways:
- Canada’s population fell by 0.2% in the third quarter, marking a significant decline due to a crackdown on international students.
- The drop is attributed to a decrease in the number of international students studying in Canada, following Ottawa’s pledge to reduce the number of study permits issued.
- The Liberal party has shifted its stance on immigration, aiming to reduce the number of non-permanent residents to 5% of the total population by 2027.
- The federal government plans to cut the number of international student permits in half, while increasing the number of permanent residents admitted into Canada.
- The population decline is expected to have significant economic impacts, including a weakening of the rental market and less pressure on services inflation.
Introduction to Canada’s Population Decline
Canada has experienced one of its largest drops in population in the most recent quarter, with a 0.2% decline in the third quarter. This marks a dramatic turnaround for a country that has long relied on immigration to drive economic growth. According to new estimates released by Statistics Canada, the country’s population fell to 41.6 million, down from 41.65 million on July 1. This decline is the only other quarterly drop on record, aside from the one in 2020, which was attributed to Covid-19 border restrictions.
The Role of International Students in Canada’s Population Decline
The recent decline in Canada’s population is largely driven by a drop in the number of international students studying in the country. This is a result of Ottawa’s pledge to reduce the number of study permits issued, in an effort to tamp down on what many saw as unsustainable migration. The Liberal party, which had previously overseen record-levels of immigration under the tenure of former prime minister Justin Trudeau, has shifted course quickly in response to mounting pushback. In the third quarter of 2023, Canada’s quarterly population growth was the highest ever since 1957, with 420,000 people added to the country over that three-month span. However, non-permanent residents, including international students, now make up roughly 6.8% of the total population, down from 7.3% last quarter.
The Government’s Plan to Reduce Non-Permanent Residents
The current prime minister, Mark Carney, has pledged to reduce the number of non-permanent residents in Canada to 5% of the total population by the end of 2027. To achieve this goal, the federal government plans to cut the number of international student permits in half, from a target of 305,900 new arrivals for 2025 to 155,000 in 2026, and 150,000 in each of 2027 and 2028. At the same time, the government plans to gently increase the number of permanent residents admitted into Canada, with a target of 395,000 new permanent residents in 2025, 380,000 in 2026, and 365,000 in 2027. Finance minister François-Philippe Champagne has stated that Canada had "exceeded our capacity to welcome" and provide services to immigrants in recent years.
Economic Impacts of the Population Decline
The population decline is expected to have significant economic impacts, according to Robert Kavcic, an economist at Bank of Montreal. Kavcic wrote in a note that a "major population adjustment is well under way and it remains one of the biggest economic stories" in Canada. He expects that in order to hit the non-permanent resident target share, population growth will need to run barely above zero through 2028, before settling back into a longer-term run rate of just under 1%. Kavcic also sees a "significant weakening" of the rental market, less pressure on services inflation, and growth in real gross domestic product per capita as potential impacts of the decline.
Regional Variations in Population Growth
The new figures show that every province and territory reported population decreases, apart from Alberta and Nunavut, both of which had increases of 0.2%. This suggests that the population decline is a widespread phenomenon, affecting most regions of the country. The decline in population is likely to have significant implications for regional economies and communities, particularly those that have relied heavily on international students and other non-permanent residents. As the government continues to implement its plan to reduce non-permanent residents, it will be important to monitor the economic and social impacts of this policy shift.
Conclusion
In conclusion, Canada’s population decline in the third quarter marks a significant shift in the country’s demographic trends. The decline is largely driven by a drop in the number of international students, following Ottawa’s pledge to reduce the number of study permits issued. The government’s plan to reduce non-permanent residents and increase permanent residents is expected to have significant economic impacts, including a weakening of the rental market and less pressure on services inflation. As the country navigates this new demographic landscape, it will be important to monitor the effects of this policy shift and adjust course as needed to ensure the long-term sustainability of Canada’s economy and communities.