Some economists look at the debt-to-GDP ratio as a better measure of a country’s economic health than looking at overall debt. And given Canada’s relatively good standing in this regard, there might not be too much cause for concern.
“It looks like the debt to GDP ratio has gone down over the last 6 quarters (…) which most economists would consider positive,” said Ron Correll, BCIT School of Business.
In 2017, Canada ranked seventh among G20 countries with respect to debt-to-GDP at 89.6%; higher than the United Kingdom (84%) but much lower than the U.S. (105%) and Japan (253%).
Macroeconomics has long theorized that running deficits leads to inflation, which can drive counties into recession and shrink GDP growth. Though, this theory has come under scrutiny.
Either way, Canada is in a relatively better position than it was in 1997, when debt-to-GDP was in excess of 100%.