Photo: James Bombales

When it comes to the major economies that are facing the greatest risks worldwide, Canada’s is near the top, a new study suggests.

Oxford Economics, an international research firm, says Canada has one of the “riskiest” economies for households in the world right now as the household debt-to GPD ratio has grown by about 7 percentage points in the past five years alone.

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“At the household level, debt risks look most severe in South Korea, the Netherlands, Canada, Sweden and Australia with evidence of significant pockets of ‘over-indebtedness,’” writes Adam Slater, a lead economist at Oxford Economics, in a Research Briefing.

Canada’s current ratio, which expresses household debt as a percentage of a nation’s gross domestic product, is at 100.2 percent, not far from an all-time high.

Household debt includes mortgages as well as consumer debt, such as outstanding credit card debt. While household debt remains high, the rate of mortgage growth has been slowing as tougher lending rules take a bite out of Canadians’ ability to borrow. Meantime, interest rates have been rising.

As of the third quarter of 2018, households in Canada owed about $1.77 in credit market debt (also including mortgages) for each dollar of disposable income, according to Statistics Canada.

In a report published last week, Oxford Economics said that while households are indeed “overstretched” with debt, it wasn’t likely they were at the breaking point, in part due to projected income growth and the fact that the vast majority of mortgage borrowers are keeping up with monthly payments.

While Canada’s household debt-to-GDP ratio is the second highest of the countries Oxford Economics includes in the study, five economies saw larger increases in recent years.

In China, for example, the household debt-to-GDP ratio swell by 18 percentage points in five years. Its ratio remains about half what Canada’s is, however.

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