The level of default in Brazil surpassed the 65 million mark in February for the first time since May 2020, when the country and the world faced the height of the first wave of the Covid-19 pandemic.
The latest monthly survey carried out by Serasa, released last week, shows that 65,169,146 people were in default. The number is surpassed in the last two years in only two periods: April 2020, which registered 65,908,612 defaulters, and May of that year, with 65,231,943 debtors.
The data for February this year is higher than that recorded in all other months between 2020 and 2022, including the pre-pandemic period. In February 2019, for example, 62,172,903 were in default — 3 million less.
According to experts consulted by the CNN Brasil Businessdefault in Brazil today has different traits from those observed in 2020, when the world experienced the beginning of a crisis caused by a new virus.
“We reached a number of people similar to the beginning of the pandemic, but the causes are different”, said Patrícia Camillo, manager of Serasa.
She explained that the rise in inflation and interest rates from the emergence of the Covid-19 pandemic caused defaults to currently reach high levels.
On June 17, 2020, the Selic rate was at a historic low of 2.25% per year, while the IPCA (Broad Consumer Price Index) in the 12-month period was 2.13%. Currently, the basic interest rate is 11.75% per year, while inflation in the last 12 months reached 11.30%.
According to Patrícia Camillo, although the beginning of the pandemic was very delicate for the economy, the period had government incentives and incentives that prevented the data from that time from being even worse.
In the current scenario, the reopening of establishments and the withdrawal of restriction measures contribute to the recovery of the economy, which in turn has some segments historically with higher default rates, such as banks and cards.
“The banking and card segment generally registers higher default rates when compared to other sectors, but lately this movement has been a little more accentuated, as people use the card a lot for food, which was greatly impacted by inflation”, he explained. .
The banking and cards segment recorded 28.63% in the level of delinquency in February 2022, according to Serasa. Close behind are the categories of utility services (23.19%), retail (12.54%) and telecommunications (7.43%).
The banking and card category has always led the survey, but has seen modest growth this year compared to the initial pandemic peak.
In April and May 2020, the index was 27.58% and 27.59%, respectively – just over 1% from February 2022.
Serasa explained to the CNN Brasil Business that the sum of the categories does not result in 100% as there are several other segments with insignificant indicators for the dissemination of results.
Patrícia Camillo also pointed out that the total amount of debt is getting close to the pre-pandemic level. In 2019, the sum totaled BRL 230 million, but that changed with the arrival of the virus, taking the index to lower levels, between BRL 208 million and BRL 210 million.
In the last survey, the total debt amount reached R$ 221 million, above that recorded in previous months and approaching the numbers prior to 2020.
It is worth mentioning that Serasa publishes the next default rate in Brazil, referring to the month of March, April 17th.
Economist Gesner Oliveira also stated that the characteristics of current delinquency differ from those observed by experts during the first half of 2020.
“In that period there was a sudden drop in the population’s income, in job losses and in the withdrawal of work”, he pointed out.
“Now, we have a certain recovery in the economy, still very modest, but what changes is that we also had an increase in credit. Interest has grown very fast, at a record level since 2021,” she noted.
According to the economist, the main problem is that income and employment have not kept up with the increase in interest rates. Stagnant income, which makes Brazilians lose their purchasing power.
Despite this, Oliveira analyzed that there is a repressed demand due to the pandemic period that makes people want to go shopping.
“It’s natural that there is a pent-up demand, but I don’t think it’s a false sense of purchasing power. In the apparel, fabric and footwear sector, for example, it is understandable that people are going back to going out and shopping,” he said.
Even so, the economist believes that it is necessary to design a stronger financial education in the country, to explain to the credit recipient how much he is paying, what his real income is and how he can contract interest-bearing debts.
“Financial education is a problem in the world, we observe consumer behavior in the US and there is a lot of reckless borrowing. There are marginalized people who do not have access to this kind of knowledge,” she pointed out.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
