Canadian Prime Minister Mark Carney addressed reports of the technical recession in the country, saying his government’s decision to reduce immigration is partly the cause behind the weakness in the economy.
Last week, Statistics Canada (StatCan), the country’s data agency, reported that the economy contracted by 0.1% in the first quarter of this year. Since that followed a quarter of contraction, it is termed a technical recession.
Asked about that scenario in Ottawa on Tuesday, Carney said, “We see some weakness, in part because of clear decisions by the government. We have taken back control of immigration. That’s meant population growth has flattened, in fact, it’s been negative for the last two quarters.”
Carney said his government was in the process of “laying the foundation” for a stronger, more resilient, more independent Canadian economy, but that process was “settling in” and in the interim, “the data are going to be uneven.”
In March this year, StatCan estimated that Canada recorded a decline in its population in 2025, the first time since the count began over 150 years ago, and the fall in numbers was primarily driven by the lower intake of non-permanent residents including international students and temporary workers.
According to preliminary data released by StatCan, Canada’s population decreased by 102,436 people, a drop of 0.2% from January 1, 2025, to January 1, 2026. This reduction, the agency said, was due to the fall in population seen in the third (-76,068) and fourth (-103,504) quarters of 2025.
“Population growth had already begun to slow at the start of 2025, and the increase in the population over the first six months of the year (January to June, +77,136) was not enough to outweigh the losses observed in the last six months of the year (July to December, -179,572),” it noted.
Much of the historic decline, if the numbers hold against future adjustments, was due to the steep fall in temporary residents. In the last quarter of 2025, estimates indicated that the number of non-permanent residents in Canada decreased by 171,296.
After reaching 3,149,131 on October 1, 2024, the number of non-permanent residents living in Canada steadily decreased to 2,676,441 on January 1, 2026. However, the potential impact of permit extensions mentioned earlier may lead to an update of the number of non-permanent residents for years 2025 and 2026.
“The decrease in the number of non-permanent residents living in Canada noted in the fourth quarter of 2025 was mainly attributable to decreases among people holding a study permit only, a work permit only, or both a work and study permit,” the agency stated.
According to data from Immigration, Refugees and Citizenship Canada, there were 393,530 new permanent immigrants to Canada in 2025 compared to 483,655 in 2024, marking a 19% reduction in their numbers. Much of the decrease was driven by the decline in immigrants from India, with their numbers going down from 127,375 to 98,770. The number of Indian permanent residents admitted to Canada rose from just 42,875 in 2020 to a peak of 139,790 in 2023.
Study permits issued dropped by nearly 25% or 131,010, with Indians accounting for a massive 72% of that fall. India is the largest source country for this category and their numbers fell from 188,175 in 2024 to 94,605 in 2025.
Canada could face further headwinds as it has to negotiate a refreshed free trade deal with the United States, along with Mexico. That uncertainty has driven the government to seek new economic partnerships. Among them is the potential comprehensive economic partnership agreement with India, negotiations towards which are expected to be complete before the end of this year. Carney described that as a “game changer” for Canadian businesses and workers when he met Commerce and Industry Minister Piyush Goyal in Ottawa last month.