Canadians are the most indebted people in the world, according to a new report by the Organization for Economic Cooperation and Development (OECD).
In a new report on global indebtedness, the OECD warned that rising private debt loads pose a risk to continued economic growth in Canada. The OECD noted that consumer debt tops 100% of gross domestic product (GDP) in Canada, and that Canadians are carrying the highest household debt loads in the world, along with citizens of South Korea and the United Kingdom.
“Household and corporate debt in many advanced and emerging market economies is high,” the OECD said in a pre-released section of its new report on household debt levels by country. “While higher indebtedness does not necessarily imply that problems are just around the corner, it does increase vulnerability to shocks,” it added.
With the global economy showing its most even expansion since the 2008 financial crisis, debt levels and credit quality are among the risks that could trigger a downturn in countries such as Canada. Consumer debt tops 100% of GDP in Canada, with South Korea and Britain both above 80%.
The Bank of Canada has also issued warnings on household indebtedness and cited consumer debt levels as one of the reasons it is likely to hold interest rates steady for the foreseeable future. On corporate borrowing, the OECD warned in its report about a shift in risk from banks to the bond market and a “substantial” decrease in credit quality.
