Alarm bells are sounding over the ever-escalating level of household debt in Canada, with the Bank of Canada being a leading bell-ringer. Increasing debt is making Canadians more financially vulnerable as the economy stumbles, economists warn.
Deputy governor of the Bank of Canada, Lawrence Schembri, will be in Guelph on Wednesday for the Guelph Chamber of Commerce Economic Leadership Forum. It happens at noon at Cutten Fields, 190 College Avenue. Tickets are $60.
Schembri is expected to speak about the heavy debt load that is making Canadians increasingly vulnerable during this period of slowdown in the country’s economy. His audience will have an opportunity to question him on fiscal policy and other economic matters.
Appointed to the Bank of Canada three years ago, Schembri is one of the economists tasked with promoting a stable and efficient financial system. He helps set the strategic direction of the Bank of Canada, including decisions around raising and lowering interest rates.
“Household debt will be one of things he talks about,” said Kithio Mwanzia, president and CEO of the Guelph Chamber of Commerce. But the Guelph business community wants to hear much more from Schembri.
Guelph is one of the fastest growing communities in Canada, Mwanzia said.
“We have economic statistics that offer us a lot of genuine opportunity and hope,” he said. He included among those statistics the fact the Guelph has the highest gross domestic product per capita in Ontario and the lowest jobless rate in all of Canada.
“When we sought to host him, we knew that he would be able to address a number of things related to fast-growing communities like ours,” he added. “Given the fact there will be a Q&A portion, he’ll likely being taking on questions from the audience that have an interest in some of these other elements.”
Mwanzia conceded that Guelph is not immune to the sluggishness in the national economy, but the diversity of the local economy’s supply chain, he said, gives it added resilience. The chamber is dedicated to advocating for a diverse manufacturing sector and supply chain, as well as focusing the business conversation on exporting, and on new markets for agri-business and agricultural technology.
“Nothing makes you immune to an economic slow down, but it certainly offers a bit of a safeguard,” he said. “We are going to keep working on that in a strategic way.”
Research is forthcoming from the chamber about market conditions and how Guelph businesses can maneuver through changing conditions.
Late in 2015, Statistics Canada released data showing that Canadian household debt has been rising sharply, with Canadians on average having $1.64 in debt for every dollar of disposable income. The debt-to-income ratio is now the highest it has been since 1990, at 174 per cent.
Household debt levels are expected to hit record levels sometime this year, making it more difficult for Canadians to navigate an economic downturn.
The Parliamentary Budget Office said in a report last month that rising interest rates or a drop in income make Canadians more financially vulnerable. A recent Ipsos Reid poll found that one quarter of nearly 1,600 people polled across the country were currently unable to cover their bills and debt payments, with nearly half of those surveyed being within $200 each month of being unable to pay their bills and make debt payments.
