IMF On Canada: Household Debt, Overvalued Housing Pose Risks

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"While Canada’s medium-term outlook remains broadly favorable, near-term downside risks are high due to the financial market turmoil in Europe and rising household indebtedness," the IMF said in a public information notice. | AP

OTTAWA - The International Monetary Fund says Canada's economy is slowing and faces risks both at home and abroad.

The IMF says Canada not only faces headwinds from the global economy, but also challenges from record-high household debt and an overheated housing market.

The Washington-based monitor of the global economy says Canada's house prices are about 10 per cent above fundamentals, and more so in some areas.

A 15 per cent correction in prices could cut 1.5 per cent from private consumption, the IMF says, damaging the economy.

For the nation as a whole, the IMF says Canada's economy likely grew by 2.2 per cent this year and will expand a further 1.9 per cent next year.

That is close to the Bank of Canada's projections for growth.


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