Brazil’s Poorest Households Carry Record Debt Into a Weaker 2027

Brazil's poorest households are shouldering record debt as they face a weaker economic outlook in 2027. Household debt in the country reached an all-time high of 82% in July 2026, with the burden falling hardest on the lowest earners. Surveys and data from the central bank and credit bureau show that 84.9% of families earning up to three minimum wages carried debt, compared to just 72% for those earning more than ten minimum wages.

Arrears reached 29.8% of families, and 29.5% of the average budget went towards debt service. Credit cards were the primary source of debt, accounting for 85.3% of the total. The poorest households also tend to rely more heavily on the costliest credit lines. Lower earners also lean more heavily on the costliest credit lines, such as revolving card balances and pre-approved overdrafts, which charge higher interest rates compared to other forms of credit.

The central bank's Selic rate cut has not significantly impacted the credit lines used by poorer borrowers. Economists warn that the record borrowing could lead to a slowdown in consumer demand next year, with consumption growth projected to slow from 2% in 2026 to 0.8% in 2027. If incomes remain stagnant, consumption could even contract by 0.4%.

The financial sector, including retailers and consumer lenders, faces the most significant risk if household debt continues to rise. While some projections suggest a slight improvement in 2027, the Brazilian government and central bank maintain a more cautious stance, emphasizing the potential for a decline in consumer spending and economic growth.