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Brazil’s sky-high interest rates have long been a source of amusement and bafflement for visitors who learn that credit cards charge (on average, in September, according to central bank figures) 475.2% a year, overdrafts 321.1% and unsecured personal loans 132.3%.
These exorbitant interest rates have also been a source of academic study, with many economists trying to break down the multiple, deep-rooted causes of the high-interest economy into their constituent parts. This is because Brazil’s interest rates are also a cause of economic harm, with the heavy debt-servicing burden on individuals sucking money out of an economy that would otherwise consume more goods and services.
And investment? Imagine the rate of return required on a business project that is based upon the average non-earmarked corporate lending rate of 30%.
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