IMF report warns of Canada’s high debt levels
The International Monetary Fund warns in a new report of Canada’s high debt levels and higher-thanaverage pressure on Canadian households’ ability to pay down that debt.
The IMF said in its Global Financial Stability report on 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. The IMF also said 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 noted 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 warned that past experience shows these two factors can create strain and, with a sharp fall in asset prices, can spill over to the economy.