Lower immigration reshaping economy: Canada central bank report

Canada's central bank has reported that lower immigration is reshaping the country's economy. The Bank of Canada (BoC) explained that the population is aging and fewer immigrants are arriving, leading to slower economic growth. Over the past 150 years, Canada's population has consistently increased, but the growth rate slowed to 0.5% in 2025, the slowest in over a century.

This is due to both declining immigration levels and an aging population with a birth rate below replacement level. Historically, Canada's population grew at a steady rate of 1.2% over the past 50 years, peaking at 3% in the early 2020s. This growth helped create jobs and ease labor shortages, but also put pressure on housing and social services.

In 2024, the federal government began reducing immigration levels, resulting in many temporary residents leaving Canada. Fewer new immigrants will arrive in the coming years, and Canadians will continue to age. The BoC emphasized that immigrants play a crucial role in the economy, as they are often young and start contributing soon after arriving.

They also fill labor shortages in sectors like restaurants and agriculture, and bring in skills and knowledge that are in short supply. Immigrants' spending creates demand in the economy, which helps fuel growth. The BoC stated that understanding the impact of demographic changes on the economy is essential for monetary policy, as it affects production, demand, economic growth, and inflation.