OECD Warns on Rising Debt Risk as Canadians Most in the Red

Further evidence that financial stress is now a mainstream issue. As reported in our white paper series, increased debt loads are putting Canadians in financially precarious situations.

The OECD warned that rising private debt loads in both advanced and developing economies pose a risk to growth as Canada, South Korea and the U.K. lead the world in household borrowing.

“Household and corporate debt in many advanced and emerging market economies are high,” the Organization for Economic Cooperation and Development said Thursday in a pre-released section of a report to be presented next week. “While higher indebtedness does not necessarily imply that problems are just around the corner, it does increase vulnerability to shocks”

With the global economy showing its most even expansion since the financial crisis, debt levels and credit quality are among the risks that could trigger a downturn. Consumer debt tops 100 percent of gross domestic product in Canada, with South Korea and Britain both above 80 percent.

On corporate borrowing, the OECD warned about a shift in risk from banks to the bond market and a “substantial” decrease in credit quality.

Article written and presented by Mark Deen, Bloomberg

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