Canada’s high debt levels troubling, new IMF reports warns
The International Monetary Fund warns in a new report about Canada’s high debt levels and higher-than-average pressure on Canadian households’ ability to pay down that debt.
The IMF says in its Global Financial Stability report released Wednesday that these dynamics in Canada’s private non-financial sector leaves its economy more sensitive to tighter financial conditions and weaker economic activity.
Canada was named along with Australia, Brazil, China and Korea as countries where the debt-service ratio has risen to high levels.
WATCH: Strategies to help eliminate debt
The IMF also says there was a particularly strong need in these economies for financial sector policy to guard against letting these imbalances grow any further.
The IMF also notes that in Australia, China and Canada, where the ratio of household debt payments relative to disposable income is highest, it has been coupled with a steep increase in house prices.
It warns that past experience shows these two factors can create strain and, with a sharp fall in asset prices, can spill over to the economy.
© 2017 The Canadian Press