Following the mounting consumer loan losses reported recently by Itau and Bradesco, here is what Nomura’s Tony Volpon told the Financial Times:

“Are the “good times” over in Brazil? After ten years of economic outperformance there are now serious doubts over what will happen over the next few years…

Looking at the rising rate of loan losses, despite still strong labor markets, it seems that a credit-to-GDP ratio of around 50% with these types of credit costs is all the Brazilian consumers can bear. The days of heady credit market expansion seem over.

Thus what has become clear is that the “Lula model” of growth, one based on the rapid expansion of consumption and credit as reactions to the Asian-led commodity boom, has reached its limit.”

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