Bank lending to the private sector in Brazil rose 18% last year and increased by 115% since the global recession in the last four years. The index was above the global average of 4%. Since 2009, China, for example, observes a jump of 112% of bank credit in the private sector. In India, loans increased by 89%, having noticed how the loans for major emerging economies are on the rise.
Although inflation has presented a considerable increase in Brazil, loan growth remained substantial in real terms. Loans rose 10.6% last year. The average loan growth in the BRIC countries was 16.3% in real terms.
For the consulting company, the increase in bank lending in the Brazilian private sector has been driven by the BNDES (National Bank for Economic and Social Development) in an attempt to stimulate the economy through funding for a wide range of projects in all areas of economy.
However, experts believe that the injection of capital for the Brazilian economy is a high-risk strategy if the current concern with Chinese credit levels will materialize. For the international consulting director of Ewaider Moreira, Eric Waidergorn, increased lending in Brazil helped to prevent an economic crisis in recent years, but the short-term prospects for the economy are not yet certain.
“An important question is whether domestic firms will be able to manage debt levels that assumed, as the Brazilian economy grows at levels lower than expected. There are also concerns about the sustainability of credit levels in China. A crisis there would have a serious impact here as it is a very important market for us, “he says.
Source: Cidade Verde