“Voronaso,” withdrawals and unemployment have characterized delinquency in Chile over the past decade. 4.15 trillion people have outstanding debt, most of them aged 30 to 59. Banks and retail have the highest concentration of defaulters.
Debt service is one of the most important indicators of the health of the financial system and households.
To track their behavior, since 2013 the University of San Sebastian (USS) and Equifax have been conducting delinquent debt reports on our people.
And to mark this first decade, diagnostic results from the past decade have been revealed. According to statistics, as of March this year, 4,150,039 million people had outstanding debts, with total defaults reaching $10.5 billion, with an average default of 1,996,867 pesos.
Since the first USS and Equifax report (April 2013), there has been an upward trend in the number of people with outstanding debt, the amount of delinquency, delinquency as a percentage of population, and delinquency as a percentage of gross domestic product. (GDP).
The increase came after a sudden drop in these indicators in February 2012, when Law 20,575 came into force. The so-called “Boronasso” has expunged delinquent records of less than P2.5 million. The financial well-being of these people remains a concern as the default has not been cleared.
Before the obscurity, as of December 2011, there were nearly 4 million people with outstanding contracts, representing 33% of the population over the age of 18 at the time.
June 2020 marked the highest level reported in the past decade, with 5 million people in delinquency, a figure driven by the 2 million jobs destroyed by the pandemic and an unemployment rate of 13.1%. pushed up a lot.
“Our analysis finds that delinquency is a symptom of a larger disease and a thermometer that measures the functioning of the economy. We found that the number of delinquencies increased by 0.7 percentage points and the value of delinquencies increased by 0.3 percentage points,” explained Alejandro Weber, Dean of the Economics Department. San Sebastian University Government.
The latter “shows that accessing permanent income through regular jobs and better salaries is the best way to cut it,” he added.
Other blurs and impacts of AFP withdrawal
The upward trend in delinquency levels temporarily halted in June 2020, when a new “vagueness” (Law 21, 214 ) was caused by the liquidity shock from withdrawals from
September 2020 saw the biggest drop in the number of people with outstanding debt, with around 600,000 debtors from quarter to quarter.
“For every 1 percentage point increase in liquidity, the number of delinquencies decreased by 0.3 percentage points and delinquent debt decreased by 0.1 percentage points. This was only a temporary decline as it responded to the highest level of inflation in 30 years, largely driven by fund withdrawals, lower real wages, and an 8% unemployment rate that ended the year. was approaching,” Weber said.
Age of the defaulter
During the 10-year measurement, delinquency was concentrated in the 30- to 59-year-old group.
In terms of the number of people with unpaid commitments, the most complex scenario is the 30-44 year old demographic, which totaled 1.8 million as of March 2020, representing more than 40% of the population in that demographic. It became a number to .cluster.
Taking average defaults into account, the highest amounts belonged to the 45-59 segment, at about P3 million from September 2020 to July 2021.
In the analysis by gender, there was no difference in the proportion of both.
Over the entire period, men had nearly twice as much outstanding as women.
Delinquencies are concentrated in retail and banking
New metrics have been incorporated into the history of the report to better reflect national conditions. From 2018, distribution by item has been added.
Over the last decade, retailers have the most people with outstanding debt, while banks have the highest share of total outstanding debt (47% each as of March 2023). and 57%).
Another addition from 2022 was classification by socio-economic group (GSE).
As of March 2023, 47.4% of socio-economic group D (median income $651,196) are in arrears, equivalent to 2.4 times median income. The total arrears for this group accounted for 48.3% of the total.