Tuesday, August 30, 2011

S&P: No Credit or Asset Bubble in Brazil

Contrary to what some popular 'economists' claim on the Internet, Standard & Poor's said it does not believe that Brazil is currently in a credit bubble, despite the jump in the country's economic growth.

The report should allay fears of a bubble, the S&P points out that the expansion of Brazil's economy has averaged nearly 5% annually in recent years, enough to put 30 million Brazilians in the middle class.

As a result, more Brazilians have gained access to banking services and credit for consumption, nearly doubling the relationship between consumer credit and Gross Domestic Product (GDP) since 2001. However, S&P said that the country is not in an asset or credit bubble and credit nor faces a situation like this in the near future.

"Such a jump in credit growth will certainly lead to some losses on credit," said Milena Zaiboni, credit analyst at S & P. "We believe the comprehensive surveillance and prudent policies of the Central Bank will make this deterioration manageable,"

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