Key insights
- Credit growth in Latin America is slowing due to tighter financial conditions. Brazil sees slower credit concessions and rising household debt service burdens, with increasing non-performing loans. Mexico experiences a sharp decline in bank credit growth to the private sector. Argentina's credit channel remains shallow. Colombia's new credit disbursements have significantly decelerated. This may indirectly affect US equities through reduced global demand and potential risk-off sentiment.
Investing.com -- Credit growth across Latin America has decelerated as tighter financial conditions take hold, with some deterioration in asset quality observed as debt service burdens increase, according to Barclays.
In Brazil, credit concessions continued to grow despite monetary tightening by the central bank in 2024-25, though at a slower pace. Total credit concessions grew 4.2% in real terms in the 12 months ended in March, down from 10.4% a year earlier. The slowdown was primarily in market-rate credit, which grew 4.1% compared to 11.2% previously.
Outstanding credit lines represent 55.8% of GDP in Brazil, up from 54.7% a year earlier. The share of household income committed to debt service reached a record high of 29.7% in February, up from 26.2% two years earlier. Non-performing loans climbed to 5.3% of household credit in March, from 3.9% a year before.
The Brazilian government recently relaunched a debt renegotiation program for 90 days, allowing low and middle-income borrowers to restructure outstanding debts with discounts ranging from 30% to 90%. The government provides a credit guarantee fund mobilizing as much as 15 billion reais in financial resources.
In Mexico, bank credit to the private sector posted annual growth of 1.8% in April in real terms, down sharply from 9.0% in April 2025. The expansion was led by consumer credit at 7.1% and housing credit at 0.4%, while credit to firms contracted 0.7%. Non-performing loans increased slightly to 2.4% of the total portfolio, up from 2.2% in April 2025.
Argentina's credit channel remains shallow, with bank credit to the private sector at less than 10% of GDP. Total deposits in the banking system amount to only around 12% of GDP. Lending to the private sector stands at roughly 67% of peso deposits, up from 33% in May 2024.
In Colombia, new credit disbursements have significantly decelerated, with the three-month moving average moderating to 9% growth as of April 2026 from around 40% in October.
Ecuador is running a current account surplus of approximately 6% of GDP last year. Credit growth has remained robust, expanding at 10% annually, supporting consumption and investment.
In Peru, credit growth has been accelerating, registering an expansion of 8% annually in the first months of the year, likely reflecting the easing of monetary policy through last year.
In Central America and the Caribbean, Panama, El Salvador, and Costa Rica show credit to private sector shares at 68%, 53%, and 51% of GDP respectively, while the Dominican Republic and Guatemala report lower rates at 31% and 36%.