Canada has recorded one of its most significant quarterly population declines in modern history, a direct consequence of a major government crackdown on international student numbers. The drop signals a stark reversal for a nation that has long relied on robust immigration to fuel its economic growth.
A Historic Demographic Shift
According to new estimates released by Statistics Canada, the country's population decreased by 0.2% in the third quarter of 2025, falling to 41.6 million from 41.65 million on 1 July. This is only the second quarterly decline on record; the first occurred in 2020 and was attributed to Covid-19 border restrictions.
The current downturn, however, stems from a deliberate policy shift. The federal government, led by Prime Minister Mark Carney, has moved aggressively to reduce the influx of non-permanent residents, particularly international students. This marks a sharp departure from the record-level immigration seen under former Prime Minister Justin Trudeau's Liberal government.
Policy Targets and Economic Drivers
The government's strategy involves a significant reduction in study permits. Targets have been slashed from 305,900 new international student arrivals in 2025 to just 155,000 in 2026, with a further cap of 150,000 for both 2027 and 2028. Concurrently, Ottawa 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 acknowledged the strain, stating Canada had "exceeded our capacity to welcome" and provide adequate services to newcomers in recent years. The overarching goal is to reduce the share of non-permanent residents from 6.8% of the total population to 5% by the end of 2027.
Economic Repercussions and Regional Impact
Economists are closely watching the demographic adjustment. Robert Kavcic, an economist at the Bank of Montreal, described it as "one of the biggest economic stories" in Canada. He noted that the previous population explosion—which saw nearly 1.3 million people added within a year—had exacerbated economic challenges, including intense pressure on the rental market and services inflation.
Kavcic suggested the slowdown could lead to a "significant weakening" of the rental market and less inflationary pressure, potentially boosting real GDP per capita. The new figures show the population decline was widespread, with every province and territory reporting decreases except Alberta and Nunavut, which each saw a 0.2% increase.
This dramatic policy pivot underscores a national reckoning with the sustainability of its immigration-fuelled growth model, setting the stage for a new economic chapter defined by more restrained population expansion.
