Canada’s household debt the highest in the world

Canada is the most indebted country in the world, according to the Organization for Economic Cooperation and Development (OECD). The Canadian debt-to-income ratio of 101% is the highest out of the 35 developed and developing countries monitored by the organization. This high ratio has been attributed to inflated housing prices, placing greater strain on Canadian households which could lead to increased risk of economic shocks.

For the most part, countries that experienced rapid debt levels ahead of the financial crisis in 2009 have begun to stabilize, except for those with soaring house prices. In a statement, the OECD said: “Although in part this reflects strong population growth, these developments may entail significant risk to financial stability given the direct exposure of the financial system to the housing market”.

As demonstrated by Statistics Canada’s housing price index, prices have been on the rise in recent years, indicating the potential strain on Canadian households.

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