The novel coronavirus pandemic will further strain Canadian household finances, the country's central bank said in a report on Thursday
TORONTO (Pakistan Point News / Sputnik - 14th May, 2020) The novel coronavirus pandemic will further strain Canadian household finances, the country's central bank said in a report on Thursday.
"Reduced liquidity in the housing market could add pressure to household finances since households may find it increasingly difficult to sell their homes," the Bank of Canada said in its 2020 financial system review. "Despite the deferrals and added borrowing, some households are likely to fall behind on their loan payments."
The report adds that the share of households with debt payments accounting for more than 40 percent of their income - a household vulnerability benchmark - is likely to rise. According to reports in March, Canadian household debt totals more than $1.7 trillion.
Canada's central bank also is concerned about rising levels of insolvency, as the country begins to emerge from the COVID-19-induced economic devastation.
The bank does, however, note the resiliency of Canada's financial system, especially the country's six largest banks, and says that the policies implemented at the onset of the pandemic mitigated some of the shock to the system.
The pandemic has had a profound effect on the Canadian economy with nearly a quarter of the labor force employed in February having had their income streams substantially affected and unemployment rate rising to 13 percent, according to the federal statistics agency.
A report from Canada's Office of the Parliamentary Budget Officer (PBO) signaled that the country faces the largest real GDP decline in recorded history of 12 percent in 2020 and in recent days PBO Yves Giroux said that it is possible that Canadian federal debt could surpass $710 billion ($1 trillion CAD) this fiscal year during a parliamentary finance committee meeting.
