Brazil and Thailand have little in common, except populations that have gorged themselves on debt offered by newfangled online lenders. They aren't the only ones.
Household borrowing in India jumped by a third in the year to March, by official data. Up to 100 million Chinese are delinquent on personal loan payments, according to Gavekal Dragonomics.
It's a problem.
So-called financial inclusion, turning mattress savers into depositors and borrowers, has long been hailed by development types as a boon to growth and social equity. The internet made it happen. Some 30% of humanity opened their first bank accounts between 2011-2025, by World Bank data. The boon has a dark side, though.
Thailand looks like the champion in household borrowing relative to gross domestic product, approaching 90%. A big chunk is tourism-related investment that didn't pan out as visitor numbers languish at 20% below prepandemic levels, says Antonios Roumpakis, a social sciences professor at Hong Kong Metropolitan University. "People invested in an Airbnb flat, but the rents didn't materialize," he notes.
Families across East Asia -- Malaysia and Philippines are trouble spots too -- are also going into hock for private schools and tutors to push their children through narrow funnels to prestige universities and jobs, Roumpakis adds.
The most critical situation is probably in Brazil, thanks to mountainous interest rates. With the Central Bank's prime rate at 13.75%, consumers are paying an average 62% on non-secured credits, says Alberto Ramos, head of Latin American economic research at Goldman Sachs. That translates to a record 29% of household disposable income going for debt service, adds Arthur Budaghyan, chief emerging markets strategist at BCA Research. The U.S. was at 18% before the 2008 global financial crisis.
Once-hot fintech stocks focused on Brazil are taking a drubbing as their core market deteriorates. Nu Holdings, parent of Nubank and e-commerce, and lending giant MercadoLibre have both dropped by a quarter this year.
The good news is that many countries are so far immune to the Brazilian disease by virtue of culture and/or regulation. "This is mostly a Brazilian problem" in Latin America, Ramos says.
India, though on a consumer debt watchlist, "can grow its way out of it," Budaghyan says.
The better news is that core banking systems look solid even in affected markets after post-GFC safety upgrades. "Brazilian banks are properly regulated," Ramos says. "Their capitalization is strong. There's no systemic threat."
China still offers other emerging markets a bleak example of what happens when credit bubbles burst, BCA's Budaghyan says. Five years after Xi Jinping's government more-or-less intentionally crashed a runaway housing market, consumer credit and housing starts are still contracting, and one in 10 adults struggles with debts they can't pay.
China has famously offset its domestic calamities by revving exports into overdrive. Thailand is following that strategy in miniature. Exports jumped 20% year-over-year for January-September, driven by electronics to feed the great global artificial intelligence machine.
Brazil lacks that alternative engine. Ramos predicts stagflation ahead as tighter credit and some fiscal slowdown halt economic growth while inflation stays around 5%, restraining interest rate cuts.
Financial inclusion remains "critical for economic growth and poverty reduction in emerging markets," the World Bank maintains, bestowing benefits from rainy day savings to pay-as-you-go renewable electricity purchases. It also "poses consumer risks."
Those are getting harder to ignore.
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