Canada adjusts to lower GDP growth expectations in a shifting demographic era

In a new report titled Resetting Expectations: Canada’s Economy in a Lower-Immigration Era, economists Don Drummond and Parisa Mahboubi warn that Canada's reduced immigration targets represent a fundamental structural shift. They project that real GDP growth could fall to just 0.4% in 2026, significantly trailing official forecasts from the Bank of Canada and the Federal Government's recent economic updates. The authors emphasize that upcoming monthly employment declines, estimated at roughly 4,500 jobs per month in 2026, should be interpreted as demographic constraints rather than cyclical economic weakness. Correctly diagnosing this "demographic-driven softness" is critical to avoid miscalibrated fiscal or monetary policy responses that could inadvertently spark inflationary pressures.

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