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Canada’s historic household debt levels will almost certainly affect banks and the GDP, according to a long-time markets observer.

“The level of household debt is a big impediment to Canadian growth. It could be a problem – I think it will be a problem or a constraint – on Canadian bank earnings,” Gluskin Sheff + Associates chief economist and strategist David Rosenberg told BNN Bloomberg earlier this week.

“Is it a question of impairing bank capital? No, I don’t see that at all. But I would say we do have, still, a debt bubble of historical proportions in this country.”

StatsCan data showed that on average, Canadian households owed nearly $1.79 for every dollar of their disposable income during the final quarter of 2018.

Latest numbers from insolvency firm MNP Ltd. also indicated that as of the end of Q1 2019, fully 48% of Canadians are $200 or less away from financial insolvency. For comparison, the level during the quarter prior was 46%.

Earlier this month, Deloitte Canada chief economist Craig Alexander stated that the steady increase of overall debt levels has diminished the purchasing power of a significant proportion of consumers. This has become especially apparent in the sharp decline of large purchases in both the residential and commercial sectors alike.

Alexander further argued that the International Monetary Fund’s predictions for future Canadian economic growth are more optimistic than what is warranted by current trends and fundamentals.

“They’re too optimistic,” he told the Financial Post. “The reality is that many people’s expectations of what represents good growth are actually too high.”

In its outlook released early April, the IMF pegged Canadian growth at 1.5% this year, and 1.9% for 2020, which will accompany an expected global growth of 3.6% that year.

Alexander’s estimates placed GDP expansion at 1.3% this year, and 1.5% in 2020.