Slowing population growth puts Canada’s economy at risk

Canada’s economy runs on consumer spending, and consumer spending runs on people. Slowing population growth weakens that foundation

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Canada’s economy runs on consumer spending, and consumer spending runs on people. By policies that are shrinking population growth through tighter immigration, student and foreign worker caps, Ottawa is weakening one of the few economic levers it still controls.

The global trade situation has been turned upside down by the unforeseen, unexpected, frequent, and seemingly random changes in tariffs and other trade policies that have been emerging from the United States. Since the U.S. is still the world’s largest economy and Canada’s biggest trading partner, this will affect everyone, including Canadians, but it is impossible to say how.

The world political situation is now more volatile than it has been for decades, with wars and other conflicts much too easy to start and almost impossible to stop.

Given all the factors we can’t do much about, we should really be focusing on those elements that we do have some control over. One of these is population.

For a developed country like Canada, the measure of how the economy will function is spending, since virtually all aspects of economic activity are calibrated in dollars. Governments spend, often more than their income. Businesses spend. We call that investment. Foreigners buy Canadian goods and services—exports.

But the biggest component of spending and hence economic activity is consumer spending; you and me buying the goods and services that contribute to our living and our lives. Such consumption makes up about two-thirds of Canada’s total output. If consumer spending is weak, it almost does not matter what the rest of the economy is doing.

We will not prosper. As we peer into 2026, we find several reasons to anticipate falling consumer spending.

Consumer spending depends upon the number of consumers, that is, total population. When population grows, so does consumption. And population growth comes from natural increase (births minus deaths) and immigration. The birth rate in Canada has been low since the 1960s and the death rate rises as our population ages.

We have been relying on immigration to keep our economy growing, especially since there has been low productivity growth in Canada and our average income per person has actually been falling.

Until recently, this sad fact has been hidden by the immigration-induced growth in population, which pushed total Canadian output up.

However, this illusory bubble has now been burst. Not only have October figures shown that total output has actually declined, but the number of people in Canada has begun to decline. It is rare to find an example of a strong economy in a country where population is not increasing.

Recent Statistics Canada data show that population growth slowed sharply in late 2024 and 2025 as new limits on immigration, foreign students and temporary foreign workers took effect.

The drop in the number of people is the result of government policies that curtail immigration and severely limit foreign students and temporary foreign workers. The stated justification for these drastic steps is to provide more housing and jobs for the Canadians that are already here.

But slowing the overall economy is unlikely to lead to the construction of affordable housing units.

Eliminating high fee-paying international students has already led to faculty layoffs in educational institutions and even to shutting down specific courses and programs that are no longer available to produce the trained workers and professionals we need.

Foreign temporary workers did not take jobs away from Canadians. They have only been allowed in to fill vacancies where it has been clearly demonstrated that no Canadians were able or willing to do those jobs. Ask any employer of temporary foreign workers about the complicated and time-consuming rigmarole that must be gone through to bring in a foreign worker.

Banning or even reducing the number of such workers in Canada will hamper the agricultural sector, where many work. It will raise the cost of producing food and may lead to the closure of some agricultural operations.

This will be reflected in higher grocery store prices.

Smaller, more remote communities are already struggling to attract Canadians for the lower-paying service sector jobs and even for the more lucrative professional ones, like doctors. Immigrants and temporary workers are the ones who make many of these already challenged towns and villages viable. Putting up barriers at the border will make a bad situation worse.

In the world today, many see Canada as a great place to live. That it is, but it can be better. If we want Canada to prosper and thrive in 2026, let us welcome the people who will help us grow.

Dr. Roslyn Kunin is a respected Canadian economist known for her extensive work in economic forecasting, public policy, and labour market analysis. She has held various prominent roles, including serving as the regional director for the federal government’s Department of Employment and Immigration in British Columbia and Yukon and as an adjunct professor at the University of British Columbia. Dr. Kunin is also recognized for her contributions to economic development, particularly in Western Canada.