October saw sharpest fall of the year in corporate credit demand in Brazil, with minus 16.4%

Data from a survey conducted by Serasa Experian show that October saw the sharpest fall of the year in corporate demand for credit, with a reduction of 16.4%, which demonstrates a sign of a slowdown in the Brazilian economy, motivated in part by the high level of interest rates.

The data are from the Business Demand for Credit Indicator, released this Thursday (Nov. 24).

The highlight of the drop was the Micro and Small Enterprises (MSEs), which had a drop of 16.9% in the credit search.

Medium-sized companies had a reduction of 1.4%.

Large companies were the only ones to register an increase in the search for financial resources, with a growth of 3.1%.

The survey was based on a sample of approximately 1.2 million CNPJs consulted monthly in Sarasa’s database.

“Domestic credit remains the favorite of large companies to the detriment of rising interest rates in the international market. This trend may remain until the beginning of 2023, given the need to pay heavy bills such as taxes and vacations that compromise cash flow.”

“For small and medium-sized companies, the permanence of the high Selic rate is an aggravating factor for them to be more cautious about taking recourse,” said the economist from Serasa Experian, Luiz Rabi.

In the sector analysis, the sharpest drop in the credit search was registered among Service (-20.8%), Industry (-13.5%), and Trade (-11%) companies.

In the regional ranking, the South region had a reduction of 39.4%, followed by the Northeast (-8.1%), the Southeast (-7%), the Midwest (-3.2%), and the North (-0.7%).

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