Canadian companies have been able to increase their borrowing substantially—which is appropriate given their need to ride out their loss of revenues during the shutdown. Households likewise have been able to borrow more, partly reflecting the fact that some mortgage payments have been postponed. While these are encouraging signs, new challenges are in store.
We also observe an increasingly important mechanism whereby, for example, a recovery in the US economy stimulates East Asian economies, and this in turn has a positive impact on Japan. Looking at the domestic front, steady progress has been made in solving structural problems. The debt to sales ratio for all industries has declined from its peak in 1993.