Canada’s economy slows as immigration falls, says Prime Minister Mark Carney

Canada’s economy has entered what experts call a “technical recession,” and Prime Minister Mark Carney says one of the main reasons is the government’s decision to reduce immigration. According to Carney, slower population growth and a decline in the number of newcomers have affected economic activity across the country.

The Canadian government believes that controlling immigration is necessary for long-term stability. However, the policy has also created short-term economic challenges. As fewer immigrants, international students and temporary workers arrive in Canada, population growth has slowed, leading to weaker economic performance.

Economic growth slows

Canada’s economy shrank by 0.1 percent during the first three months of 2026, according to Statistics Canada, the country’s official data agency. This decline came after another quarter of economic contraction. When an economy shrinks for two consecutive quarters, economists describe it as a technical recession.

Speaking in Ottawa, Prime Minister Mark Carney acknowledged that the economy is currently facing some weakness. He explained that part of this slowdown is linked to deliberate government decisions regarding immigration.

According to Carney, the government wanted to regain control over immigration levels after several years of rapid population growth. As a result, fewer immigrants, international students and temporary workers have entered the country.

Carney said that because population growth has flattened and even turned negative during the past two quarters, the economy is experiencing a period of adjustment. He added that the government is trying to build a stronger, more resilient and more independent economy for the future.

The Prime Minister also noted that economic data may remain uneven while these changes take effect. Although the government expects long-term benefits, the transition period may continue to create challenges for businesses and consumers.

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Population decline raises concerns

One of the most significant developments in Canada has been the decline in population growth. Statistics Canada reported earlier this year that the country’s population fell during 2025, marking the first annual population decline in more than 150 years of record-keeping.

Preliminary figures showed that Canada’s population decreased by more than 102,000 people between January 2025 and January 2026. This represented a decline of about 0.2 percent.

The population decrease happened mainly because of a sharp drop in the number of non-permanent residents living in Canada. These include international students, temporary foreign workers and people holding temporary permits.

Data showed that population losses during the second half of 2025 outweighed the small gains recorded earlier in the year. As a result, Canada ended the year with fewer residents than it had at the beginning.

Statistics Canada said the biggest factor behind this decline was the reduction in temporary residents. Their numbers dropped significantly during the final months of 2025.

At one point in late 2024, Canada had more than 3.1 million non-permanent residents. By January 2026, that number had fallen to approximately 2.68 million.

Officials noted that decreases were seen among people holding study permits, work permits or both. These groups have traditionally played a major role in supporting population growth and labour market needs across Canada.

The government’s immigration policy changes were designed to reduce pressure on housing, healthcare and public services. However, lower immigration has also reduced the number of workers, consumers and students contributing to the economy.

The number of new permanent residents entering Canada also fell during 2025. Government data showed that approximately 393,000 permanent immigrants arrived during the year, compared with nearly 484,000 in 2024.

This represented a reduction of about 19 percent.

Indian immigrants were among the largest groups affected by the decline. The number of permanent residents arriving from India fell noticeably compared with previous years. India remains one of Canada’s most important sources of immigration, international students and skilled workers.

The decline was even more visible in the education sector. The number of study permits issued by Canada dropped by nearly 25 percent during 2025.

Indian students accounted for a large share of this decrease. Their numbers fell dramatically compared with previous years, reflecting tighter immigration controls and new policies introduced by Canadian authorities.

Many colleges, universities and local businesses have felt the impact of lower international student enrolment. International students contribute significantly to tuition revenues, housing demand and local economies.

Experts say slower population growth can affect economic activity in several ways. Fewer people means reduced consumer spending, lower demand for housing and fewer workers available to fill jobs.

At the same time, supporters of the government’s approach argue that slower growth may help address challenges such as housing shortages, rising rents and pressure on public infrastructure.

Canada also faces other economic uncertainties beyond immigration. The country is preparing for discussions regarding a renewed trade agreement with the United States and Mexico. Changes to trade relationships could have a major impact on Canadian businesses and exports.

Because of these challenges, the government is looking for new economic partnerships and investment opportunities around the world. Officials hope these efforts will strengthen Canada’s economy and reduce dependence on any single market.

Prime Minister Carney remains confident that the current slowdown is temporary. He believes the government’s policies will create a stronger foundation for future growth, even if the transition period causes short-term economic weakness.

For now, however, Canada faces the difficult task of balancing immigration levels, economic growth and public services. The coming months will be closely watched as policymakers, businesses and citizens assess whether the government’s strategy can deliver long-term benefits while managing the immediate effects of a slowing economy.