According to the Organization for Economic Co-operation and Development, the debt and high housing prices are the reasons why households in Canada are vulnerable.
According to the organization, Canada’s economy has become a bit more stable despite the fall in commodity prices. The country’s GDP is forecasted to grow by 2.1% next year; this prediction is a bit higher than the Bank of Canada.
However, the middle-class families in the cities of Vancouver and Toronto are in a predicament due to increasing housing prices.
The OECD supports the federal fiscal stimulus plan, and has been quoted as saying that the Canadian government should “increase federal investment in physical infrastructure, social housing, education and innovation, as planned.
” The OECD Secretary General Angel Gurría urged other countries to use the fiscal tools available to boost growth. The global economy has the prospect of modestly higher growth, after five years of disappointingly weak outcomes,” he said.
“In light of the current context of low interest rates, policymakers have a unique window of opportunity to make more active use of fiscal levers to boost growth and reduce inequality without compromising debt levels.”
Last year, Canada was sufferring due of low oil prices but the economy has beginning to come up again. While business investment has fallen quite greatly in the energy sector, and unemployment is up in oil-producing provinces, the OECD said other areas of the economy are making up for it. A lower Loonie, flexible labour markets and monetary and fiscal policy are supporting the shift towards non-resource production, especially in the export sector, it said.