Canada’s economy, the world’s 10th-largest, looks to be chugging along nicely. Though low oil prices slowed it down in 2014-2015, it grew by 3 percent last year, with help from each of the country’s provinces. But this growth has come at a cost: debt. Canada’s debt is piling up, creating vulnerabilities that could make recovery more difficult for the country in the event of another recession. This Deep Dive will investigate the scale of Canadian debt, with an emphasis on consumer debt, and whether its associated risks could spread beyond Canada.
That Canada was accumulating more debt was no secret. But the extent of the risk that debt has created became more apparent earlier this year when the Bank for International Settlements published the latest edition of its report “Early warning indicators of banking crises.” The paper lays out several metrics that have a statistically significant effect on predicting future banking crises, while minimiz