WASHINGTON, March 10 (UPI) -- The low price of oil may be spilling over to other parts of the Canadian economy, notably housing, a review from the International Monetary Fund said.
A January report from the IMF found lower crude oil prices would be a drag on investment activity in Canada, with the energy sector bearing the brunt of market trends. In its latest review, the IMF said Canada is facing additional pressures from an "over-heated" housing market and high household debt.
Forecasters in January warned the Canadian housing market be slowing as interest rates rise with lower oil prices. Oil-rich Alberta province faces a risk of a "hard landing" in response.
"Canada's overvalued housing market may be cooling off," the IMF's latest report said.
Alberta leaders take up fiscal issues Tuesday when they convene for the start of a new legislative session. Premier Jim Prentice last week said lawmakers need to focus on a sustainable economic model that does away with an over-reliance on revenue generated from oil and natural gas.
Nearly all of the oil Canada exports heads to a U.S. market that relies less on foreign resources in part because of the increase in production from shale reserves.
Prentice said Monday the fiscal challenges for the oil-rich province are significant.
"In the coming year, we are looking at a $7 billion revenue shortfall, with continued shortfalls in the years after that. Alberta has benefited from high revenues and low taxes, and used resource revenues to cover the difference," he said in a statement. "That is no longer sustainable."
The IMF in its January report said the Canadian economy has expanded at a steady pace since 2013, but growth is unbalanced.
