Record family indebtedness threatens to halt economic recovery

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At the beginning of the pandemic, Sidneia Soares, 49, received the news that she would be fired. With the beginning of the movement restrictions, the store where she worked, in São Paulo, closed its doors, and she became unemployed. Since then, he has turned around with informal jobs. But the bills kept coming. Without the minimum wage he received, he needed the help of family members not to delay basic payments, such as electricity, water and condominiums.

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Now, working as a cafeteria attendant and also as an apprentice at a hairdressing salon, Sidneia managed to fit the bills into her budget, but she still has no forecast on how she will pay the Student Financing (Fies) fees she contracted. “I cut back on my spending and reworked everything.”

With income affected by the covid-19 pandemic, families like Sydney’s and companies alike have never been so indebted. Data released yesterday by the Central Bank show that the household indebtedness reached 58.5% in April, the highest percentage in the historical series, started in January 2005. This means that for every R$100 that a family received in the last year, it already has a contracted debt of almost R$60. The monthly income commitment was 30.5% in April – that is, for every R$100 received per month, R$30 was used to pay loan installments.

A survey by Cemec-Fipe shows that the set of debts of non-financial companies in Brazil reached 61.7% of the Gross Domestic Product (GDP) in March 2021, also a historic level. At the end of 2019, before the pandemic, this ratio was 50.1% (more information on this page).