The global organization says tighter financial conditions may be needed
Canada’s economy is set to lead growth in the G7 but high levels are household debt remain a concern.
A new global report from the International Monetary Fund highlights the potential risk from household’s debt loads and their ability to continue servicing rising borrowing.
The IMF says that current conditions in the non-financial economy could mean tighter financial conditions and weakened growth ahead. That could lead to the federal government and the Bank of Canada implementing policy to mitigate against the risk.
Canada joins Australia, Brazil, China and Korea in the IMF’s list of nations where the debt service ratio is elevated.
The IMF says that historically, high levels of debt relative to disposable income coupled with high house prices can result in a sharp correction in asset prices with a negative impact on the wider economy.
The warning in the latest Global Financial Stability follows an IMF forecast for 3% growth for the Canadian economy in 2017, up half a percentage point from its previous estimate.
That puts Canada as the growth-leader among G7 nations, well ahead of the United States at 2.2%.
A new global report from the International Monetary Fund highlights the potential risk from household’s debt loads and their ability to continue servicing rising borrowing.
The IMF says that current conditions in the non-financial economy could mean tighter financial conditions and weakened growth ahead. That could lead to the federal government and the Bank of Canada implementing policy to mitigate against the risk.
Canada joins Australia, Brazil, China and Korea in the IMF’s list of nations where the debt service ratio is elevated.
The IMF says that historically, high levels of debt relative to disposable income coupled with high house prices can result in a sharp correction in asset prices with a negative impact on the wider economy.
The warning in the latest Global Financial Stability follows an IMF forecast for 3% growth for the Canadian economy in 2017, up half a percentage point from its previous estimate.
That puts Canada as the growth-leader among G7 nations, well ahead of the United States at 2.2%.
