Credit: Little Stimulus to Consumption

BRAZIL ECONOMICS - Report 27 Mar 2014 by Marcelo Gazzano, Cristina Pinotti and Affonso Pastore
The total volume of credit to individuals has been growing in real terms by around 10% a year since the start of last year. However, this does not mean that credit has been propelling consumption. On the contrary, as will be shown in this note, except for a few modalities, the supply of credit to individuals has been decelerating, and there are no indications of improvement in the short run. Graph 1 shows that the 12-month growth rate of credit to individuals in real terms has held at 10% thanks to the increase in “consigned” credit (loans with automatic repayment from wages or pension bene...

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