By Nelson Belen, Contributing Reporter

RIO DE JANEIRO, BRAZIL – After Brazil suffered its worst GDP decline in over 25 years, an increasing number of businesses are now starting to default on their debts. A survey released on Wednesday (April 27th) by the Credit Protection Service (SPC) and the National Confederation of Shopkeepers, showed the number of delinquent companies grew 11.08 percent in March compared to the same period last year.

delinquent companies in Brazil, Rio de Janeiro, Brazil News
The number of delinquent companies in Brazil grew 11.08 percent in the last twelve months compared to the same period last year, photo reprodução.

The SPC’s chief economist, Marcela Kawauti, said the dramatic one-year increase demonstrates the deepening recession that has negatively affected the financial health of many companies.

“The scenario was worsened,” the economist stressed, “by the decrease of [economic] activity combined with rising prices and, consequently, interest rates.”

“Indicator data shows that the number of delinquent companies grew significantly between March 2016 and the same month last year,” said the report. It went on to credit the increase in corporate delinquency to the unfavorable economic environment in Brazil.

The survey covered the South, Northeast, Midwest and North regions of the country, but did not include the state of São Paulo due to state legislation limiting access to certain financial data of companies.

The Northeast region showed the greatest increase in delinquent companies, 16.64 percent. The Midwest region was next, increasing by 15.66 percent, followed by the North, at 12.11 percent, and finally, the South, at 11.42 percent.

The SPC’s gloomy report comes only one month after the IBGE released its 2015 statistics showing that Brazil’s Gross Domestic Product (GDP) suffered its worst decline in 25 years.

In 2015, Brazil’s GDP declined 3.8 percent, totaling R$5.904 trillion, the largest decline since 1990. In the IBGE survey, only Brazil’s agribusiness sector showed positive growth in 2015.


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