An economist at Capital Economics says the federal budget's plan to tamp down on temporary residents would discourage new rental apartment construction. A rental sign is seen outside an apartment in Montreal on Thursday, June 26, 2025. THE CANADIAN PRESS/Christinne Muschi
An economist at Capital Economics says the federal budget's plan to tamp down on temporary residents would discourage new rental apartment construction. A rental sign is seen outside an apartment in Montreal on Thursday, June 26, 2025. THE CANADIAN PRESS/Christinne Muschi
OTTAWA - One economist argues the federal Liberals' renewed pledge to throttle immigration levels over the next few years will weigh on Canada's economic growth.
The federal budget tabled last week recommitted to a previous target of reducing the share of temporary residents in Canada to five per cent of the total population, but pushed the timeline for that goal back to 2027.
Stephen Brown of Capital Economics says the ramp down in temporary workers and students could lead Canada's population to essentially hold flat over the next two years.
He says that's likely to put a drag on growth with fewer new workers and a long-standing productivity problem.
Budget proposals that would see the number of international study permits cut nearly in half over the coming years will also discourage developers from breaking ground on new rental apartments that cater predominantly to students and freshly landed workers.
Brown says signals that Ottawa is willing to support rental construction could help soften the blow to residential investment in the face of dwindling population growth.
This report by ºÃÉ«tvwas first published Nov. 11, 2025.
