Canadians default on bills as jobs disappear

April 1st, 2009 - 1:51 pm ICT by IANS  

By Gurmukh Singh
Toronto, April 1 (IANS) With the economy sinking deeper into recession and jobs disappearing fast, more and more Canadians have begun defaulting on their home bills.

A national survey by the credit information group, Equifax Consulting Solutions, revealed Tuesday that bill delinquency rates have soared to the highest level of 7.3 percent in a decade. Canada’s unemployment rate has already crossed 7.7 percent.

There was more bad news for Canadians Tuesday as a government report said the economy, touted as the best-performing among G-8 nations till the global meltdown, further shrank by 0.7 percent in January. The January drop follows one percent decline in the Canadian GDP in December, pushing the economy further into recession.

In its report, Statistics Canada said the January drop was caused by the fall in the output of manufacturing, especially of motor vehicle and associated parts industries, as well as wholesale trade and construction.

“The finance and insurance sector, transportation, mining (excluding oil and gas extraction), and accommodation and food services also retreated,” the report said.

With Tuesday’s report, the Canadian GDP has contracted by 2.4 percent since January last year, making it the biggest decline since 1991. The Canadian economy shrank by about 3.4 percent in the last quarter of 2008, leading to loss of more than 200,000 jobs. Beginning this year, Canada lost 129,000 jobs in January, followed by 83,000 in February, pushing the national unemployment rate up to 7.7 percent.

Economists fear that this could turn out be the worst recession in decades.

With all economic indicators slipping deeper into negative territory, they say that the GDP could shrink by as much as 6 percent to 9 percent. They also fear that the unemployment rate could reach up to 10 percent, with more than 600,000 jobs disappearing.

The government has pumped billions of dollars into the system to ease credit squeeze and cut interest rates to historic lows.

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