A recent report by Serasa Experian revealed that consumer lending in Brazil is likely to pick up during the first half of the year as a result of record-low interest rates, rising salaries and reduced delinquencies.
The index, which is used to gauge trends in loan disbursements, rose 1.5 percent in December to 100.3 points, the first upturn in the market in the past year, according to Reuters.
The Brazilian government has implemented measures aimed at expanding credit in the $2.5 trillion economy, which saw a growth decline for the second year in 2012.
Last year, Brazilian legislators cut the benchmark Selic rate to an all-time low and pressured banks to reduce lending costs. In December, policymakers extended credit lines to Brazil’s construction industry and reduced reserve requirements for some financial institutions, Bloomberg reports.
In 2012, lending by banks rose 16.2 percent to nearly $1.2 trillion, though the number reflects the lowest expansion in several years. Lending rose 19 percent in 2011 and 21 percent in 2010.
“This year, with an expected improvement in default rates, maybe lending will increase by around 15 percent, but we will never again see the pace of expansion that we saw in the past decade,” Carlos Kawall, the chief economist at Banco J. Safra, said, according to Fox Business. “The great expansion of the past decade occurred because of a low basis of comparison.”