Population growth to slow with fewer temporary residents

Hi, I’m Callee Davis, Economist at Oxford Economics. Today I will be discussing why we believe Canada’s population growth will slow sharply from its recent highs. After surging by 3% annually in 2024 and 2023. We now expect Canada’s population growth to average 0.8% per annum between 2025 to 2027. This is much slower than the 1.6% per annum we had previously.

The deceleration reflects the federal government’s new target to reduce temporary residents to 5% of the population by 2027. Based on recent trends, we estimate the total number of temporary residents reached 7% of the population in mid-2024, which is around 2.9 million. As a result, we expect the level of temporary residents will need to be reduced by 800,000 to reach the government’s 5% target by 2027.

To achieve this, we assume the federal government will lift the official targets laid out in its current Immigration Levels Plan and offer 300,000 individuals permanent residency over three years. This means that a projected 500,000 temporary residents will depart Canada by 2027. As a result, we now expect Canada’s population to reach 42.2 million in 2027, which is around 1 million less than our previous forecast. In 2027, however, our population forecast is still 260,000 higher than Statistics Canada’s just released June 2024 projection. This is because Statistics Canada expects 640,000 temporary residents to leave Canada by 2027, which is 160,000 more than us.

Overall, a slower growing population will temper the previously anticipated boost to the labour supply and potential output in the near term and lessen, but not eliminate, strains on housing, education, healthcare and other public infrastructure. By 2050 we still expect the population to reach 52 million. This is in line with our previous baseline projection, but around 445,000 lower than Statistics Canada’s, due to its slightly higher long-term immigration forecast relative to ours.