**Canada's federal immigration policy continues to drive population contraction into 2026.** The 2026-2028 Immigration Levels Plan, released in late 2025, sharply cuts new temporary resident arrivals (international students and workers down roughly 40% from prior targets) while holding permanent resident admissions steady at 380,000 annually. This sustains net outflows of non-permanent residents, which already produced Canada's first annual population decline on record—a roughly 102,000 drop (0.2%) from January 2025 to January 2026. Statistics Canada data through Q1 2026 confirm ongoing quarterly declines, with non-permanent resident net flows remaining negative and analysts projecting similar or continued contraction through 2026 before modest recovery in 2027. Government and private forecasts (including from the Parliamentary Budget Officer) tie the scale of the drop directly to these caps and the target of reducing the non-permanent resident share below 5% of total population by end-2027. With no major policy reversal evident and outflows expected to persist, trader pricing reflects the view that 2026 will mark the largest annual decline since Confederation.