Canada’s central bank has said that lower immigration into the country is “reshaping the economy” as the demand created by newcomers helps fuel it.
“Our population is aging and fewer immigrants are arriving. Together, these changes are reshaping our economy,” the Bank of Canada (BoC) said in a new report.
It pointed out that over the past 150 years, the country’s population has increased each year. However, the 0.5% growth recorded in 2025 was the “the slowest” in “more than a century.”
Slowing growth was attributed to both falling immigration levels as well as an aging population with the birth rate below replacement level.
It noted that over the past 50 years, Canada’s population grew at a steady rate of 1.2%, and surged to as much as 3% in the early years of the 2020s. “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,” it said.
In 2024, the federal government began to reduce immigration levels and since then, many temporary residents have been leaving Canada, and in the coming years, fewer new immigrants will arrive while 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,” it said.
It said that immigrants play an “important role” in the economy. Many are young and they often begin contributing to the economy soon after they arrive while temporary workers often get jobs in parts of the economy with labour shortages, such as restaurants and agriculture, while highly skilled newcomers can bring skills and knowledge that are in short supply, in fields such as computer engineering.
{{/usCountry}}It said that immigrants play an “important role” in the economy. Many are young and they often begin contributing to the economy soon after they arrive while temporary workers often get jobs in parts of the economy with labour shortages, such as restaurants and agriculture, while highly skilled newcomers can bring skills and knowledge that are in short supply, in fields such as computer engineering.
{{/usCountry}}“When immigrants move to Canada, they spend money to build their life here—and that creates demand in the economy,” BoC noted, adding that the “increased demand for goods and services helps fuel the economy.”
BoC said that it’s essential it understands how demographic change impacts the economy because that matters for monetary policy. “Demographic changes influence key drivers of the economy, including production and demand. And these factors affect economic growth and inflation,” it said.