![\"An](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/10\/iStock-2172319817-cropped.jpg\" "\\"Immigration")
\nImmigrants play an important role in the Canadian economy<\/p>\n
Why is population growth slowing?<\/p>\n
For more than 150\u00a0years, Canada\u2019s population grew every single year. In 2025, population growth slowed to just 0.5%\u2014the slowest rate of growth in more than a century. And it wasn\u2019t a one-off. Slowing population growth is part of an emerging trend that will reshape how our entire economy works.<\/p>\n
There are two main reasons why Canada\u2019s population growth is slowing.<\/p>\n
\nThe population is aging. For several decades, Canada\u2019s birth rate has been below the level needed to replace the population.
\nFewer immigrants are coming to Canada. After a significant increase in the early 2020s, immigration levels have begun to decline as policies have adjusted.
<\/p>\n
It has been more than 50\u00a0years since Canada\u2019s birth rate first fell below the level needed to sustain the population. But until 2025, our population didn\u2019t actually decline. Our immigration policies made it possible for millions of new immigrants to establish themselves here.<\/p>\n
Over most of the past 50\u00a0years, our population grew at a steady rate of about 1.2% each year. Then, in the early 2020s, Canada\u2019s population grew by as much as 3% per year. The growth raised the number of workers in the economy and helped ease labour shortages, but it also increased pressure on housing and social services.<\/p>\n
In 2024, the federal government began to reduce immigration levels. Many temporary residents are leaving Canada, and in the coming years, fewer new immigrants will arrive. Canadians will also continue to get older. This will affect the size of our workforce, what we buy and how much the economy can produce.<\/p>\n
\nImmigrants play an important role in the Canadian economy<\/p>\n
Many immigrants are young and they often begin contributing to the economy soon after they arrive. Temporary workers often get jobs in parts of the economy with labour shortages, such as restaurants and agriculture, while highly skilled immigrants can bring skills and knowledge that are in short supply, in fields such as computer engineering.<\/p>\n
When immigrants move to Canada, they spend money to build their life here\u2014and that creates demand in the economy. They buy things to furnish their home and spend on everyday goods and services such as groceries, clothing and transportation.<\/p>\n
The increased demand for goods and services helps fuel the economy. And because immigrants also add to how much the economy can produce, the extra demand doesn\u2019t usually drive up inflation. But not every sector responds to demand in the same way.<\/p>\n
Businesses can often adjust their production relatively quickly by hiring more workers or increasing output. But the housing sector responds more slowly than other parts of the economy. It takes time to build a house or an apartment building, and stronger demand for housing can push up rents and house prices.<\/p>\n
In the coming years, fewer immigrants are expected to arrive, which will reduce demand for housing. This could lower pressure on housing costs. At the same time, less immigration will mean fewer workers and weaker demand for other goods and services. The economy won\u2019t grow as fast as a result.<\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/10\/iStock-2227781250-cropped.jpg\" "\\"Some")
\nAn aging population produces and consumes differently<\/p>\n
Canada\u2019s population has been getting older for a long time. In 1971, the median age in Canada was about 26.1<\/a> Today, it is over 40.2<\/a> With fewer people being born and fewer young immigrants moving here, our population will continue to get older.<\/p>\n The trend is largely driven by the baby boom generation. Following the Second World War, a very large number of babies were born in Canada. This generation has now largely reached retirement age. An aging population will change the goods and services we produce because older people have specific needs.<\/p>\n
An aging population also affects the workforce. As more people retire, there will be fewer young people replacing them. A smaller workforce means the economy won\u2019t produce as much. Labour shortages could push up wages in some sectors, which could affect prices and contribute to inflation.<\/p>\n We don\u2019t have a role in making immigration policy and we can\u2019t change the fact that Canadians are getting older. But when the Bank makes monetary policy decisions, we need to understand how structural changes such as slowing population growth could affect the economy and inflation, both now and in the future.<\/p>\n Demographic changes influence key drivers of the economy, including production and demand. And these factors affect economic growth and inflation. To keep inflation at or around our 2% target, it\u2019s essential that we understand how demographic changes are shaping the economy.<\/p>\n This article is part of a series on how changes in technology<\/a>, demographics and international trade<\/a> are transforming the Canadian economy. The Bank of Canada can\u2019t offset the effects of these changes. But by keeping inflation low, stable and predictable, we can support the economy as it adjusts.<\/p>\n","protected":false},"excerpt":{"rendered":"Why is population growth slowing? For more than 150\u00a0years, Canada\u2019s population grew every single year. In 2025, population…\n","protected":false},"author":2,"featured_media":925720,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[49,48,44],"class_list":["post-925719","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-ca","tag-canada","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/925719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=925719"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/925719\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/925720"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=925719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=925719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=925719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nOlder people have different housing needs, and many choose to move to smaller homes that are easier to maintain.
\nSome retirees travel more and spend more of their income on leisure, which could affect the cost of travel services such as flights and accommodation.
\nOlder people spend more of their money on health care. This adds to demand for pharmaceuticals, adaptive living products and supportive home care services. Given Canada\u2019s system of universal health care, it could also change how much governments need to spend on hospitals and long-term care\u2014as well as the level of taxation needed to fund these services.
<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/10\/iStock-2060934937-cropped-1200x400.jpg\" "\\"When")
\nWhy demographics matter for monetary policy<\/p>\n