Canada's Population Declines for First Time Since Confederation, Setting Two Records
Canada has reached a significant demographic milestone, with its population shrinking annually for the first time since Confederation in 1867. According to the latest data from Statistics Canada, the country's population fell by approximately 100,000 from a year ago, marking an unprecedented shift in its growth trajectory.
Unprecedented Demographic Records
This decline represents two new population records for Canada: the first annual decrease since the nation's founding and the first instance of consecutive quarterly declines. The fourth quarter of 2025 saw a population drop following a decline of about 80,000 in the third quarter, signaling a broader trend of demographic contraction.
The primary driver of this population decrease has been a sharp reduction in non-permanent residents, which fell by six percent and are now down by nearly 500,000 since peaking in late 2024. Additionally, Canada is experiencing a negative birth rate, further exacerbating the decline. While permanent immigration provided some offset, it was still twenty percent lower than the previous year, according to economist Kyle Dahms of National Bank of Canada.
Economic Implications and Provincial Variations
The demographic shift is having tangible effects on Canada's economic landscape. Kyle Dahms noted in a report, "Canada's demographic engine is cooling rapidly, with broad implications for labour supply, housing demand and the economic outlook." This cooling is reshaping both quarterly and annual economic projections across the country.
Provincially, the impact varies significantly:
- British Columbia, Ontario, and Quebec all recorded population declines.
- Alberta was the only major province to experience growth, primarily due to an increase in interprovincial migration.
RBC Economics has adjusted its growth forecasts downward for several provinces in response to these demographic changes. The team, led by chief economist Frances Donald, reduced Ontario and Quebec's 2026 growth forecasts to 0.9 percent each, down from previous estimates of 1.1 percent. Similarly, British Columbia's forecast was cut to 1.1 percent from 1.2 percent.
Housing Market Consequences
The population decline is already affecting Canada's housing market. Robert Kavcic, senior economist at BMO Capital Markets, predicted that new housing starts would slow alongside the demographic downturn. February 2026 saw housing starts at 250,900, below economists' estimates of 255,000.
However, National Bank warned in a separate February report that construction cannot afford to slow down if Canada hopes to address its ongoing housing crisis. The bank cautioned that reduced construction activity could jeopardize recent improvements in housing affordability, which have resulted from falling immigration and slowing demand.
Policy Context and Future Outlook
This demographic reset follows significant policy changes implemented by the previous federal government in 2024, which substantially reduced the number of people allowed into the country. The combination of immigration cuts and natural population decline has created what economists describe as a "cooling demographic engine" with far-reaching consequences for Canada's economic future.
As Canada navigates this new demographic reality, experts emphasize the need for balanced policies that address both population management and economic stability. The unprecedented nature of these population declines suggests that Canada may be entering a new era of demographic challenges that will require careful navigation in the coming years.
