# Why Canada's shrinking population is actually part of the plan

By [Brandon Donnelly](https://brandondonnelly.com) · 2026-03-22

immigration, canada, population, economics, statistics-canada, toronto, vancouver, montreal, quebec, ottawa

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This week, Statistics Canada [reported](https://www.theglobeandmail.com/business/article-canada-reports-first-annual-population-decline-on-record/) that, for the first time in over 70 years, the country's population declined. Current estimates indicate a decline of around 102,000 people last year, leaving a [total of 41,472,081 people](https://www150.statcan.gc.ca/n1/daily-quotidien/260318/dq260318b-eng.htm) in the country as of January 1, 2026.

![](https://storage.googleapis.com/papyrus_images/7646c081d486ff7891d3847f7c58a40ed3458b41708ae1cb19c30a3d64ae40ef.png)

[Opinions](https://x.com/donnelly_b/status/2035114212448432379?s=20) on this are mixed. On the one hand, a declining population can help improve things like housing affordability and increase GDP per capita (total wealth becomes divided by fewer people). It can also help improve productivity by forcing a country to innovate in lieu of relying on physical labor.

But at the same time, there are consequences to a declining population. It can result in economic stagnation and it can topple the equilibrium of pension plans. Not enough young people paying into the system. Fewer savers. Fewer spenders. Fewer innovators.

It can also reduce the soft and hard powers of a country. [According to the IMF](https://www.imf.org/en/publications/fandd/issues/2025/06/the-debate-over-falling-fertility-david-bloom): "...some historians attribute France’s 1871 defeat in the Franco-Prussian War to the low fertility and slow rate of population growth that stemmed from early and widespread use of contraception among married couples in France."

My own simplistic view is that growth is good. We want Canadians having babies and we want the absolute best and brightest and most ambitious from around the world clamouring to come here to innovate, start companies, and grow the total economy.

The good news is this continues to be our plan.

The leading factor in Canada's current population decline is fewer non-permanent residents. That is, temporary foreign workers, a great number of whom are/were international students. As many of you know, this policy is in response to a demographic shock that the country experienced between 2022 and 2024 that, among other things, lowered productivity levels.

Going forward, [the federal plan is as follows](https://www.canada.ca/en/immigration-refugees-citizenship/corporate/transparency/committees/soci-nov-17-2025/levels.html):

*   Dramatically reduce the number of temporary residents (international students and low-skill temporary workers). Again, this specific policy is largely responsible for the current population correction.
    
*   Stabilize permanent immigration to 380,000 people per year from 2026 to 2028 (under 1% of the population).
    
*   Admit most permanent immigrants under the "economic" classification. The target is 64% of all permanent residents by 2027. This is a class of applicants who are scored based on age (younger is better), education (smarter is better), language proficiency, and relevant work experience, with the goal of having them immediately contribute to the Canadian economy.
    
*   Target 12% Francophone permanent resident admissions _outside_ of Quebec by 2029. (As a self-proclaimed Francophile/Quebecophile and proponent of bilingualism, I laud this effort.)
    

What all of this should mean is that by the end of 2026, we are expected to "burn off" the wave of temporary residents leaving the country and, by 2027, we should return to steady and manageable population growth. This is one of the reasons why [I believe that 2026-2027 will be a turning point](https://brandondonnelly.com/my-predictions-for-2026) for many of our housing markets, and hopefully the start of our next economic cycle.

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_Cover by_ [_Robbie Palmer_](https://unsplash.com/@robbieshots?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText) _on_ [_Unsplash_](https://unsplash.com/photos/silhouette-of-houses-and-tower-near-river-during-sunrise-Gf3bWrqiIGQ?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText)

_Chart from the_ [_Globe and Mail_](https://www.theglobeandmail.com/business/article-canada-reports-first-annual-population-decline-on-record/)

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/why-canadas-shrinking-population-is-actually-part-of-the-plan)*