Key Takeaways
- Canada’s population growth slowed to 0.5% in 2025, its slowest pace in more than a century.
- Lower immigration could reduce housing demand while also limiting labour supply and consumer spending.
- An aging population is changing demand for healthcare, housing, travel and other services, with implications for inflation and public spending.
Bank of Canada Warns Aging Population and Lower Immigration Are Reshaping Canada's Economy
Canada's demographic landscape is changing, and the consequences extend well beyond population statistics. In an October 8, 2026, article, the Bank of Canada explained how slower population growth, fewer newcomers and an aging population could influence employment, housing, consumer spending and inflation.
Why Canada's Population Growth Is Slowing
Canada's population grew by just 0.5% in 2025, its slowest rate in more than a century, according to the central bank. The Bank identified two major factors: a long-term decline in birth rates and fewer immigrants arriving after immigration levels increased sharply in the early 2020s.
Immigration has helped expand Canada's workforce and address labour shortages. Newcomers also spend money on housing, groceries, transportation and other essentials, supporting demand across the economy.
What It Means for Housing and Jobs
Lower immigration can reduce demand for housing, potentially easing some pressure on rents and home prices. However, the Bank cautioned that fewer newcomers also mean fewer workers and weaker demand for other goods and services.
Because housing supply responds more slowly than many other sectors, changes in demand can take time to affect rents and house prices.
The workforce faces another challenge as more Canadians retire. If fewer younger workers replace them, some industries could experience labour shortages. The Bank says labour shortages could push up wages in some sectors, affecting prices and contributing to inflation.
An Older Population Changes Spending
Older households often have different needs from younger families. Demand may shift toward health care, pharmaceuticals, supportive home care services and different housing needs. Spending on travel and leisure could also influence particular industries.
These changes matter for government budgets, businesses and the wider economy. The Bank says demographic trends affect both the amount Canada can produce and the level of demand for goods and services.
TwikUp's Perspective
Demographic change creates different pressures across sectors rather than one predictable economic outcome. Housing demand may ease while demand for health care and supportive home care services increases.
For policymakers and businesses, these demographic trends underscore the need to account for changing service needs and workforce conditions.