Perspectives for the credit supply

BRAZIL ECONOMICS - Report 30 Jul 2018 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

The flows of new credit in real terms, both to households and firms, remained stable in the first half of 2018. On the one hand there was a steady decline in the interest rates on loans, together with a reduction in the level of default, indicating better credit conditions. On the other, the indications of banks’ (un)willingness to lend acted in the other direction. The uncertainties about the next government’s stance toward the agenda of reforms necessary for fiscal consolidation is an important element working against an increase in the credit supply. However, if these uncertainties wane, it is unquestionable that the lower rates of default and arrears will produce conditions for a more rapid expansion of credit and aid the economic recovery.

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