A new report from Desjardins suggests that while the Canadian government’s plan to slow population growth is starting to work, it won’t achieve its target this year.
The report released on Thursday says since immigration targets were revised, there have been signs the influx of new non-permanent residents has slowed and population gains have decreased in key segments, with the newest immigrants seeing the fastest slowdown.
Using data from Statistics Canada’s Labour Force Survey, Desjardins’ economic analyst LJ Valencia and deputy chief economist Randall Bartlett found that while year-over-year population gains remain high, month-over-month growth has slowed “considerably” from its 2024 peak.
But according to the report, the current number of non-permanent residents coming into the country won’t allow Ottawa to meet its target of reducing temporary resident volumes to less than five per cent of the general population.
“Our population projection is mostly unchanged,” the report’s authors write.
In October 2024, the federal government laid out plans to reduce the number of new permanent residents in the country as part of changes to immigration targets aimed at freezing population growth.
Among the changes were also new levels for temporary residents, with plans to welcome 445,901 temporary residents by 2025, then reducing it to 445,662 in 2026.
Desjardins estimated new non-permanent resident permit holders dropped by 25 per cent year-over-year in the final quarter of 2024, but the total number rose almost 40,000, amounting to about 100,000 more than what it or the federal government had previously forecast.
Desjardins’ outlook for non-permanent residents and the federal government’s target for permanent resident admissions “suggest that population growth should slow considerably in Canada.”
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However, the company says it’s still “skeptical” Canada will reach its admission targets for newcomers.
It also adds that it has yet to see permanent resident admissions come down.
What’s yet to be seen is how outside pressure could change the targets of the government, with Desjardins noting corporate Canada has expressed concerns about labour shortages. The report suggests these corporate organizations could put pressure on Ottawa to “moderate” some of its policies, in part due to high job vacancies in some industries.
“In addition, the federal government has struggled to meet some policy objectives in the past, and the prospect of meeting its new immigration targets is especially daunting given the administrative challenges associated with executing such a significant policy shift,” the report’s authors write.
Tariffs by U.S. President Donald Trump may also have an impact on Canada’s ability to meet its targets.
The financial institution cautions if tariffs come into effect, the country could slip into a recession while also seeing the demand for temporary labour slow “considerably.”
While an “unintended consequence of an undesirable outcome” for the economy the report says it could help the federal government meet its targets more quickly.