Canada slams the brakes on immigration levels

Canada is to sharply slow the number of immigrants the country will allow to arrive, leading to a decline in the population for 2025 and 2026.

Justin Trudeau is struggling in the polls. Picture: AFP

Canada is to sharply slow the number of immigrants the country will allow to arrive, leading to a decline in the population for 2025 and 2026.

The aggressive intake of immigrants positioned Canada as having the fastest population growth among Group of Seven countries by a significant margin, and officials acknowledge newcomers helped fuel a strong economic ­recovery following the Covid-19 pandemic.

The influx of newcomers, though, placed considerable strain on housing affordability, infrastructure and social services, and officials say it’s time to slow down.

“We didn’t get the balance quite right,” said Prime Minister Justin Trudeau, who’s struggling in the polls and faces re-election in a year, or maybe sooner.

Two polls released last week indicated that a majority of ­Canadians believed the country was admitting too many newcomers.

Officials said with its new plan, they expect the population to decline marginally, by 0.2 per cent in both 2025 and 2026, a dramatic slowdown from the current 3 per cent-plus year-on-year pace.

Mr Trudeau and Immigration Minister Marc Miller said the number of permanent residents, or immigrants legally allowed to work and live in the country without a visa, would be reduced by about 20 per cent in 2025 from previously planned levels, to 395,000, and dwindle further to 365,000 starting in 2027.

Furthermore, Canadian officials will work to reduce the number of temporary immigrants in the country, either on work or student visas, by about 500,000 next year and 2026.

Mr Miller previously said the government would reduce the share of temporary-visa holders to a 5 per cent share of the population over a multi-year period. Current data indicates temporary-visa holders make up over 7 per cent of the Canadian ­population, which is now above 41 million.

“It is a responsible plan to grow immigration, while the net effect is a pause on the population growth,” Mr Miller said.

Curtailing the intake of immigrants marks one of the biggest policy sea-changes from the Liberal governments. Since coming to power in 2015, Liberal administration officials have advocated for an aggressive immigration policy, and lauded how the ­country is better than its developed-world peers in welcoming newcomers and incorporating them into the economy.

Economists and policy analysts argue Canada would find ­itself in a recession were it not for population growth.

The new immigration plan will have immediate ramifications on the economy, analysts say. The Bank of Canada’s latest economic forecast, released this week, anticipates growth of 2.1 per cent next year on the assumption population growth would slow in 2025 to 1.5 per cent. Canadian ­officials now say the population will shrink. The Bank of Canada cut its policy rate by a half-point on Wednesday, to 3.75 per cent, citing slowing inflation and soft economic conditions.

Economist Derek Holt of Bank of Nova Scotia said the government’s new immigration plan should lead to a drop in the unemployment rate and Canada’s ­potential output. As a result, the amount of excess supply, or spare capacity, in the economy could disappear faster than the Bank of Canada projects.

“The Bank of Canada will wish to tread carefully,” Mr Holt said.

The Wall Street Journal