While many Americans are strangled by accumulated debt, the situation could be worse – we could be in Brazil. Brazil’s top credit information bureaus estimate that as of April, more than fifty five million Brazilians were behind on paying off credit cards or loans. As reported by the Associated Press, that represents thirty seven percent of the nation’s adult population of about two hundred million people.
The number of Brazilians falling behind on their debt repayments is expanding. According to the SPC credit information bureau, since January, seven hundred thousand additional people have fallen behind. Much of this is attributable to a sharp slowdown in Brazilian economic growth. After peaking at a seven point five percent annual rate of growth in twenty ten, Brazil’s economy has been in retreat.
It is expected to shrink more than 1 percent this year, in part because Chinese demand for Brazilian commodities such as iron ore and soy has been falling. But consumer debt is the real story. Brazil’s consumers have accumulated such large bills that nearly 30 percent of disposable income now goes to servicing debt. By contrast, according to the U.S. Federal Reserve consumer debt serving in the U.S. accounts for a bit more than five percent of disposable income.
