How Much Will Canada’s Population Grow? Nobody Knows, but We Can Predict Where It Goes

The population projection is foundational to Canada’s economic outlook, as it’s made up of the consumers and workers who will drive future economic activity and government revenues. Once taken for granted, the population growth forecast is now more uncertain than ever.

Canada’s population has surged recently, largely driven by a sharp increase in net non‑permanent residents (NPRs), such as temporary foreign workers and foreign students. Assuming future immigration is in line with federal government plans, NPRs will be the primary driver of population growth going forward.

The forecast for the working-age population (people ages 15 and over) we used in our recent Economic and Financial Outlook External link. This link will open in a new window. is roughly consistent with the projection through 2025 in the Bank of Canada’s October 2023 Monetary Policy Report. It suggests working-age population growth could average about 1.8% annually from 2023 through 2028. Over the same period, we expect real and “trend” or potential GDP growth to average 1.5% and 1.7%, respectively.

Looking at alternative scenarios for NPR admissions, closing the door to temporary newcomers would deepen the recession expected in 2024 and blunt the subsequent recovery. It would similarly lower potential GDP. Our provincial analysis External link. This link will open in a new window. came to a similar conclusion. In contrast, materially increasing the pace of NPR admissions would likely raise real GDP growth to the point of possibly preventing a recession in the near term and improving long-run economic outcomes.

While the pace of NPR admissions should slow naturally with the economy, changes in federal government policy could cause them to fall even faster. A sharp drop‑off could deepen the recession expected in early 2024. As such, caution is warranted on the part of policymakers to minimize the economic downside of slowing newcomer arrivals too quickly. But it’s not an easy balance to strike, as sustained high NPR admissions could further strain provincial finances and housing affordability.