IMF re­port warns of Canada’s high debt lev­els

Truro Daily News - - CANADA -

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.

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