Debt renegotiation grows with weak economy
Posted: Mon Jan 27, 2025 9:35 am
Amid the economic recession and the weakness of the credit market, renegotiations of household debts with the financial system are one of the few segments still showing dynamism. Data from the Central Bank (BC) show that the average balance of these operations in the third quarter grew by 2.1%, compared to the average of the previous three months.
The pace of expansion was less intense than that seen in the first two quarters of this year, and in September there was even a stabilization, but even so the data from last quarter shows that renegotiations are in the opposite direction to the rest of the free credit (for individuals and legal entities) – whose average balance fell 1.5% in the third quarter compared to the previous period.
Economists believe that the growth trend will continue and nepal number dataset be favored in the coming months by factors such as the drop in the basic interest rate (Selic). However, they also point out that the increase in renegotiations is yet another indicator that economic activity continues at a frustrating pace.
Serasa Experian’s chief economist, Luiz Rabi, points out that household renegotiations are one of the few items in the credit market that are rising above inflation. He comments that defaults among individuals have stabilized, with a slight reduction, indicating that consumers are seeking to pay their bills and clear their names in the market. “Consumers are more concerned with getting their names out of default than expanding their debt,” said Rabi.
For him, the trend is for the growth of renegotiations to continue over time, favored by some factors. Rabi mentions the drop in inflation and interest rates and the extra revenue at the end of the year, such as the thirteenth salary and vacations. “The end of the year is favorable for renegotiations,” he said, noting that on the 8th, Serasa will begin a campaign to encourage individuals to renegotiate their debts with companies and banks. “Before, there were only factors that got in the way, but now, with inflation much lower and interest rates starting to fall, banks and financial institutions tend to be more generous with renegotiations,” he said.
Former Central Bank director and chief economist at the National Confederation of Commerce (CNC), Carlos Thadeu de Freitas highlights that the figures from the renegotiation in the third quarter reinforce the assessment that the idea of a faster recovery in the country is not supported by reality. “The economy is frustrating those who expected a quick recovery,” he said.
The pace of expansion was less intense than that seen in the first two quarters of this year, and in September there was even a stabilization, but even so the data from last quarter shows that renegotiations are in the opposite direction to the rest of the free credit (for individuals and legal entities) – whose average balance fell 1.5% in the third quarter compared to the previous period.
Economists believe that the growth trend will continue and nepal number dataset be favored in the coming months by factors such as the drop in the basic interest rate (Selic). However, they also point out that the increase in renegotiations is yet another indicator that economic activity continues at a frustrating pace.
Serasa Experian’s chief economist, Luiz Rabi, points out that household renegotiations are one of the few items in the credit market that are rising above inflation. He comments that defaults among individuals have stabilized, with a slight reduction, indicating that consumers are seeking to pay their bills and clear their names in the market. “Consumers are more concerned with getting their names out of default than expanding their debt,” said Rabi.
For him, the trend is for the growth of renegotiations to continue over time, favored by some factors. Rabi mentions the drop in inflation and interest rates and the extra revenue at the end of the year, such as the thirteenth salary and vacations. “The end of the year is favorable for renegotiations,” he said, noting that on the 8th, Serasa will begin a campaign to encourage individuals to renegotiate their debts with companies and banks. “Before, there were only factors that got in the way, but now, with inflation much lower and interest rates starting to fall, banks and financial institutions tend to be more generous with renegotiations,” he said.
Former Central Bank director and chief economist at the National Confederation of Commerce (CNC), Carlos Thadeu de Freitas highlights that the figures from the renegotiation in the third quarter reinforce the assessment that the idea of a faster recovery in the country is not supported by reality. “The economy is frustrating those who expected a quick recovery,” he said.