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Canada’s debt is bigger than its GDP

September 16th, 2016  |  Personal Finance

The Canadian economy has reached another milestone as data on the country’s finances during the second quarter of the year reveal that the country’s total debt is more than its GDP.

According to Financial Post, debt levels increased since the beginning of the year from 98.7% of the GDP to 100.5% in the second quarter. This is the first time this has ever happened in Canadian history.

Other second quarter changes include the ratio of credit market debt to disposable household income climbing to 167.6% from 165.2%. With Canadians on the hook for almost $2 trillion and an economy that seems to be treading water, there’s concern about what it will mean for the future.

As one expert in the Post article explains, the real problem isn’t rising debt, but rather the lack of income growth that is slowly making it harder for people to service their debt. The Bank of Canada’s low overnight rate is doing just about as much as it can to keep people from struggling even more in this financial climate. With debt continuing to be a problem it’s a safe bet that borrowing costs will stay low for the foreseeable future for mortgages and other loans.