Canada’s population has begun to shrink for the first time in years, a development that signals a major pivot in national immigration strategy. In the third quarter of 2025, the country saw a decrease of 76,068 residents, bringing the total to approximately 41.6 million.

This reversal stems from deliberate policy changes under Prime Minister Mark Carney, aimed at curbing the rapid influx of newcomers that strained resources in recent years.

Officials view this as a necessary correction rather than a setback, with Finance Minister François-Philippe Champagne emphasizing the need to regain control over the system for long-term stability.

The decline reflects a net migration loss of 94,000 people, offset partially by 18,000 more births than deaths. Most of those leaving were non-permanent residents, including international students and temporary foreign workers, whose numbers have dropped from over 3.1 million at the start of 2024 to about 2.8 million by October 2025. This represents a shift from 7.6 percent to 6.8 percent of the overall population.

Economists, such as Bank of Montreal’s Robert Kavcic, describe it as the sharpest quarterly drop on record since the 1940s, outside of pandemic disruptions, and a key economic narrative for the nation.

From Boom to Balance: The Evolution of Immigration Policy

For decades, Canada maintained a steady immigration flow of around 250,000 permanent residents annually from the 1990s through 2015. This rate, as a share of the population, far exceeded that of the United States, often doubling or tripling it when accounting for all forms of migration.

However, under former Prime Minister Justin Trudeau, arrivals surged post-pandemic to address labor shortages, reaching 3.1 million new permanent and net temporary residents between 2022 and 2024. This was quadruple the pre-Trudeau levels and three times larger, relative to population size, than the U.S. immigration wave during the same period, which contributed to political shifts there.

The expansion relied on two main channels: traditional permanent immigration and an uncapped temporary stream, which ballooned through programs for visa students and postgraduate work permits. By 2023, temporary admissions dwarfed permanent ones, with over one million international students alone gaining full-time work rights.

Public backlash grew as the influx exacerbated housing costs, social service strains, and youth unemployment. Polls consistently showed support for reductions, prompting Trudeau’s late-term cuts and Carney’s continuation of the approach.

Carney’s administration has prioritized sustainability. The 2025 permanent immigration target stands at 395,000, on pace to be met, while temporary resident goals will slash new arrivals from 673,650 in 2025 to 385,000 in 2026, and further to 370,000 in both 2027 and 2028.

The overarching aim is to limit non-permanent residents to 5 percent of the population by 2027, down from less than 1 percent in 2000. Many temporaries will need to depart as their visas expire, though a significant portion could transition to permanent status, with half of 2023’s permanent selections coming from this pool.

Regional Variations and Economic Implications

The population changes have not been uniform across Canada. Ontario and British Columbia experienced the steepest declines, reflecting their roles as hubs for international students and workers.

In contrast, Alberta and the territory of Nunavut bucked the trend with modest growth, possibly due to energy sector demands and internal migration patterns.

This adjustment addresses broader economic pressures. Rapid growth under Trudeau fueled inflation in housing markets, where supply failed to keep pace, and overburdened healthcare and education systems.

Critics, including business groups and progressive advocates, argue for maintaining higher levels to support aging demographics and labor needs. However, the government counters that selectivity must improve, focusing on skilled applicants to boost productivity rather than sheer volume.

Carney’s mandate letter to immigration officials stresses attracting global talent at sustainable rates, shifting from quantity to quality.

To illustrate the policy trajectory, consider the following table of key immigration figures:

Year/Period	Permanent Immigration Target	Temporary Residents (Peak Estimate)	Population Growth Rate
Pre-2015	~250,000 annually	<1% of population	Stable
2022-2024	Surged to 500,000+ goal	>3.1 million (7.6%)	~3% annually
2025	395,000	2.8 million (6.8%)	Near zero or negative
2027 Goal	TBD (focus on reduction)	<5% of population	Balanced

This data underscores the intentional slowdown, with projections for net immigration near zero in 2025 as temporary departures offset permanent arrivals.

Challenges and Future Outlook

While the current trajectory aligns with voter preferences, challenges remain. Many temporary residents face uncertainty, with expiring permits forcing departures or competitive bids for permanent spots.

Colleges in Ontario, reliant on international tuition, report strains from enrollment caps. Additionally, ensuring high-quality selections from the temporary pool is crucial; past policies under Trudeau drew criticism for reduced selectivity, potentially impacting economic outcomes.

Looking forward, Carney’s government plans further refinements, including Bill C-12 to strengthen borders and systems, introduced in October 2025. Experts anticipate several quarters of modest declines before stabilization, fostering a more balanced integration of newcomers. This approach could serve as a model for other nations grappling with similar surges, like the U.S., where immigration debates influenced recent elections.

In essence, Canada’s population dip marks the end of an era of unchecked expansion and the dawn of a more measured strategy. By prioritizing quality and capacity, the nation aims to harness immigration’s benefits without overwhelming its infrastructure, ensuring prosperity for residents old and new.