For Luis Carlos Mendonca de Barros, managing partner at Quest Investimentos and Brazil’s former communications minister, the speed of the increasing supply of consumer credit in Brazil is an unsustainable process and impossible to be replicated this year.
“It’s a bubble, just see how quickly the levels of credit have increased,” the economist said in an event. “It is important to understand what we’ve been going through right now, because the government clearly does not understand it as it is trying to replicate a very rapid growth curve for consumer credit,” he said.
According to him, Brazil is beginning to realize that there is a maximum speed of growth. “We can discuss whether it is 2.5% or 3.5%, it is somewhere around that. But you must tell this to the government, because every year they talk about 5% growth,” he said.
The economist pointed out that Brazil has gone from a country without credit to a nation with credit levels that compare to the United States. “But our society’s income growth can sustain only 3% or 4% per year of credit growth,” he said.
Mendonca de Barros also mentioned the change in credit ownership from the public to the private sector. “The share of credit by the public sector has dropped in half in the last 15 years. This shift changes the game as you have more private credit, which is a “good cholesterol” in the economy,” he said.
“This is a sign of wealth, but it is a new source of trouble,” said Mendonca de Barros.