People walk down a busy street in downtown Calgary. A sharp drop in the number of temporary residents contributed to an overall population decline of more than 100,000 people last year.Todd Korol/The Globe and Mail
Canada’s population declined by more than 100,000 people in 2025, marking the first annual decline in records that date back to the 1940s as the federal government tries to rein in the number of temporary residents in the country.
The population decreased by around 103,500 people, or 0.25 per cent, between Oct. 1, 2025, and Jan. 1, 2026, according to new estimates from Statistics Canada. This followed a decline of roughly 76,000 in the third quarter, mainly from the departure of international students and temporary foreign workers.
Combined with modest growth in the first half of 2025, the population fell by around 102,000 last year. As of Jan. 1, the population stood at nearly 41.5 million people, including citizens, permanent and temporary residents.
This recent demographic shift stands in stark contrast to the years between 2022 and 2024, where annual growth peaked at more than 3 per cent because of a large influx of international students and foreign workers. The federal government made several moves to loosen immigration policy during the pandemic in a bid to help employers fill job vacancies.
At its peak, in October of 2024, there were more than three million temporary residents in Canada, or 7.6 per cent of the population.
But this rapid growth of people in a relatively short time frame led to concerns about housing shortages, high rents and an excess of labour supply that was linked to the growing youth unemployment rate.
Over 2024 and 2025, Ottawa introduced a series of policy changes to reduce the share of temporary residents in Canada to 5 per cent of the total population by the end of 2026, a target that was later pushed back to Dec. 31, 2027. The population decline over the last two quarters is a direct reflection of these changes.
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There was a dramatic decline in the temporary resident population in the fourth quarter, according to Statscan. The number of people in this category decreased by more than 171,000, bringing their total to 2.67 million, or 6.4 per cent of the total population.
“We’re now fully in an era of normalization, with population growth of around zero expected through 2027, before settling back to a baseline of just under one per cent,” Robert Kavcic, senior economist at Bank of Montreal, said in a Wednesday morning note.
Over all, roughly 461,000 temporary residents departed Canada in 2025 on a net basis. The outflow of students and foreign workers came largely from Ontario and British Columbia, which tend to attract a higher number of temporary residents. Both these provinces saw an annual population decline in 2025 of 0.7 per cent.
Canada also welcomed roughly 394,000 permanent residents in 2025. While this mitigated some of the population decline owing to the sharp drop in temporary residents, PR admissions fell 18.6 per cent from 2024. Ottawa has also sought to curb permanent immigration to the country.
The drop in temporary residents has already had a noticeable effect on Canada’s rental market, especially in Toronto and Vancouver, where rents have declined significantly. A recent report from Urbanation and Rentals.ca showed that advertised rents across the country fell to a 33-month low in February, after 17 consecutive months of declines.
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The growth in labour supply has also slowed significantly. Combined with weak demand from employers and the uncertain trade outlook, employment growth has been meagre over the past year.
Statscan noted extensions the federal immigration department is granting to work and study permits could lead to upward revisions in population estimates in the coming months.
The agency relies on data from Immigration, Refugees and Citizenship Canada to estimate when a person becomes a non-resident. If their work or study permit has expired, or if they are deported, or they transition to permanent resident status, they are not included in the temporary resident count.
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Last week, Ottawa announced that it would issue a 12-month work permit extension for eligible workers in Quebec, in order to help keep foreign workers employed while they wait for their permanent residence applications to be processed. The government also said it would increase the number of low-wage foreign workers that employers in rural regions can employ to 15 per cent of the work force from 10 per cent.
Kyle Dahms, senior economist at National Bank of Canada, said that any upward data revisions will likely not change Canada’s current demographic trend.
“While revisions may adjust the magnitude of the Q4 decline, the underlying direction is unmistakable: Canada’s demographic engine is cooling rapidly, with broad implications for labour supply, housing demand and the economic outlook,” he wrote in a note.