Good morning. Canada’s economy is eking out growth and the size of the population is now in decline. Big cause for concern? Maybe not. According to a new report, misinterpreting the numbers could lead to a big policy misstep. That’s in focus today, along with a new home for women’s sports in Toronto.

Aviation: The CEO of AirAsia says its $19-billion order for aircraft from Airbus could double if the plane maker produces a stretch version of the aircraft.

Union probe: One of Canada’s largest construction unions is being internally investigated after a Globe investigation into a $4-million home purchase for its top official.

Attendance: A handful of BCE Inc. employees were fired because the parent company said they were swiping their key cards at the office and leaving immediately after.

I’m Matt Lundy, The Globe’s economics editor.

Over the last year, employment levels in Canada haven’t budged and the economy has barely grown. The macro indicators seem to be flashing red as the country grapples with a brutal trade war, and there is no shortage of additional risks on the horizon.

But what if the muted statistics aren’t as dire as they seem? A new report says we need to reset our expectations for Canada’s economic potential and that policymakers are in danger of misinterpreting the numbers. Reading between the lines of the data will be critical in the years ahead.

Canada finds itself in a period of tepid growth as it adjusts to a U-turn in immigration policy, according to the C.D. Howe Institute paper, written by economists Don Drummond and Parisa Mahboubi. Even with the economy operating close to capacity – neither overheated nor lacking demand – the labour market will shed tens of thousands of jobs over this year and 2027, according to the economists’ baseline forecast.

Under different circumstances, this might constitute a national crisis. But in the current scenario, “these are not signs of a struggling economy,” the paper reads. “They are what a normally operating labour market delivers, given the demographic shifts underway.”

Canada’s population grew at staggering rates from 2022 to 2024, fuelled in large part by the rapid influx of temporary residents, including workers and students. Combined with the shedding of pandemic-era restrictions, rapid expansion was the norm; over that three-year span, the labour market added a whopping 33,000 positions a month.

But the immigration boom was also widely criticized for worsening the housing affordability crisis, among other things. In response, the federal government slammed the brakes on certain pathways of migration, and that’s had a major impact on the numbers: The population fell by more than 100,000 in 2025 – the first annual decline in Canada’s history.

Risk assessment

Of course, people are workers and consumers, so their departure has a great influence on economic numbers. But the risk, according to Drummond and Mahboubi, is that weaker statistics are misdiagnosed by policymakers. If they respond with stimulus – say, by slashing interest rates to stoke demand – that could reignite inflation.

The outlook is similarly subdued for gross domestic product. The paper forecasts that growth will be 0.4 per cent this year and 0.5 per cent in 2027, before picking up steam in 2028 and beyond.

Crucially, these projections are weaker than what was recently forecast by the federal government (in its spring economic update ) and the Bank of Canada (in its monetary policy report). Under the C.D. Howe’s baseline forecast, inflation-adjusted GDP could be 11.5-per-cent lower by 2060 than in official projections.

“The implications for fiscal sustainability are significant. Lower output directly reduces revenue growth and, absent offsetting policy measures, leads to higher deficits and debt ratios,” reads the report.

Setting expectations

Canada is thankfully not consigned to a slow-growth future.

The authors note that raising Canada’s growth potential under moderate immigration would require stronger productivity growth, or output per person; higher labour-force participation rates; and more hours worked. Policy changes that boost business investment and support technology adoption would help with productivity.

Immigration will remain important, the authors note, but its effectiveness will hinge on who gains entry and Canada’s ability to absorb them – say, in the housing market.

“Canada’s economy is not broken. It is adjusting,” the report concludes. “Understanding that adjustment is a precondition for sound policy in the years ahead.”