Assessing The Likelihood Of A Consumer Credit Crunch

Our above-consensus 3.9% real GDP growth forecast for Brazil in 2012 is based in large part on our view that the Brazilian authorities can and will use available policy tools to keep private consumption expanding. But the risks to this view are sizeable and growing, as the pace of credit growth and the nature of bank financing significantly increases the potential for a policy mistake, which could severely harm Brazil's medium-term economic growth story.

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