Low debt load will help Canada weather the Recession
by investor on 22/01/09 at 2:43 pm
Canada’s low debt burden – among governments, businesses and households alike – gives the country a crucial advantage as it heads into what threatens to be a long haul.
Backed up by stability in the banking system that has become the envy of many countries, the Canadian advantage is solid enough that even the global recession and financial crisis can’t destroy it.
“The advantage is fundamental. It’s not cyclical,” said Sherry Cooper, chief economist at BMO Nesbitt Burns. “Nobody can take away the fact that Canadians are far less burdened,” both compared with other countries, especially the United States, and compared with their own past.
At the heart of the global recession is the fact that the U.S. government, financial institutions, households and companies lived way beyond their means for a long time. The effects of too much debt are being felt everywhere.
But since Canada’s governments, financial institutions, households and companies aren’t facing the same high debt problems, the country doesn’t have to fix those problems to muddle through.
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