Canada’s plan to reduce the number of immigrants over the next three years will result in a 1.7 per cent drop in the country’s gross domestic product (GDP) by 2027, according to the federal fiscal watchdog.
The report from the parliamentary budget officer (PBO), Yves Giroux, on Thursday also said that new immigration targets released by the federal government last fall will slash the country’s population by 3.2 per cent or 1.4 million people over the next three years.
The PBO report comes days after Statistics Canada reported this week that Canada’s population could reach up to 80 million in 50 years, with migratory increase a “key driver of population growth.”
The PBO report said that the federal government’s new target to reduce immigration levels would lead to 1.3 billion fewer hours worked in 2027, resulting in the drop in the real GDP.
“However, given the sizeable population shock, real GDP per capita would be 1.4 per cent higher in 2027 under the 2025-2027 [Immigration Levels Plan],” the report said.
“Overall, we estimate that the new immigration targets would reduce nominal GDP — the broadest measure of the government tax base — by 37 billion [dollars] on average over the next three years.”
Canada’s economy continued to grow last year, with StatCan’s latest report showing real gross domestic product rising by one per cent in the third quarter of 2024.
Canada’s population, which has been rapidly growing due to increased immigration, currently stands at 41.59 million, as of Thursday.
In an effort to freeze population growth, the federal government announced in October its plan to reduce the number of new permanent residents to the country by 21 per cent from 500,000 to 395,000 in 2025.
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According to the 2025–2027 Immigration Levels Plan, this number is expected to fall further to 380,000 by 2026 and 365,000 by 2027.
The PBO report said that the “large reduction in international migration results in a comparably older total population” since immigrants and non-permanent residents are typically younger.
“The reduced labour supply raises wages by 0.6 per cent on average between 2025 and 2027. However, over the same period, the smaller population reduces total household consumption by 2.0 per cent on average,” the watchdog said.
Ottawa’s immigration plan is also looking to reduce the number of temporary residents, including international students and temporary foreign workers, to five per cent of the population by the end of next year.
With that target, the federal government estimates that Canada’s temporary population will decline by roughly 909,002 people between 2025 and 2027.
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