The federal government immigration plan for 2025-27, released in October, will reduce real GDP by 1.7% by the end of 2027, according to a Parliamentary Budget Officer (PBO) report published Thursday.
The plan lowered the government’s permanent resident targets from 464,265 in 2024 to 365,000 in 2027 and imposed temporary resident targets for international students and temporary foreign workers for the first time, the report noted.
It would mean 1.4 million fewer residents by the end of 2027 than under the previous immigration plan.
Since immigrants are younger and of working age, the large reduction in newcomers will increase the Canadian population’s average age and lead to 1.2 billion fewer hours worked in 2027. This is forecast to decrease nominal GDP by $37 billion on average over the next three years.
The net reduction in excess labour supply will raise GDP inflation by an average of 0.1% over 2025-27.
However, the population shock of having 1.4 million fewer residents by the end of 2027 than under the previous plan will also raise per capita GDP by 1.4%.
If the government had not reduced its immigration targets, the Canadian population would reach 42.8 million by the end of 2027. Under the new plan, the population is projected to shrink slightly to 41.4 million over the next three years from the current level of 41.5 million.