XP Inc: Brazil's New Payroll Loan Program Will Boost GDP by 0.6%

Rhea-AI Summary

XP Inc (Nasdaq: XP) has released a research report analyzing Brazil's new payroll-deductible loan program for private sector workers. The program, launched on March 21, is projected to add 0.6% to Brazil's GDP growth, equivalent to BRL 70 billion (USD 11.7 billion) annually.

The initiative, accessible through the Digital Work Card app, extends to 47 million formal employees, including household and agricultural workers. Within weeks of launch, it has already facilitated BRL 4.5 billion in loans.

The program's impact operates through two channels: a substitution effect (+0.35pp GDP) as consumers replace high-cost debt with cheaper loans, and an incremental effect (+0.2pp GDP) from increased credit access. Consequently, XP has revised Brazil's GDP growth forecasts upward to 2.3% for 2025 and 1.5% for 2026.

Positive

• Program expected to generate significant economic growth (0.6% GDP increase)
• Strong initial adoption with BRL 4.5 billion in loans already granted
• Potential for up to 1.0% GDP growth in optimistic scenario
• Upward revision of Brazil's GDP growth forecasts for 2025 and 2026

Negative

• None.

SÃO PAULO, April 16, 2025 /PRNewswire/ -- XP Inc. (Nasdaq: XP), a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil, released a new research report from which reveals that Brazil's newly launched payroll-deductible loan program for private sector workers is set to inject a significant boost into the country's economy - adding an estimated 0.6 percentage points to GDP growth, or nearly BRL 70 billion (approx. USD 11.7 billion) in annualized terms.

The program, introduced by the federal government on March 21, opens access to more affordable credit via the Digital Work Card app, extending eligibility to 47 million formal employees, including household and agricultural workers. According to XP, this initiative is already showing strong demand, with over BRL 4.5 billion (approx. USD 750 million) in loans granted within just weeks of launch.

"This is not just a new credit product—it's a strategic macroeconomic lever," said Rodolfo Margato, XP's Economist and co-author of the report. "By replacing high-cost debt like credit card balances and overdrafts with lower-interest payroll loans, households will enjoy higher disposable income, which will ripple through to greater consumption and growth."

XP's analysis identifies two key transmission effects:

• A substitution effect: consumers swap expensive debt for cheaper loans, reducing debt service and increasing disposable income (+0.35 pp GDP impact).
• An incremental effect: greater credit access stimulates consumption-led lending growth (+0.2 pp GDP impact).

In light of the new policy and other recent government stimulus measures, XP has revised Brazil's 2025 GDP growth forecast upward from 2.0% to 2.3%, and 2026 from 1.0% to 1.5%. The report also outlines an optimistic scenario in which GDP growth could increase by up to 1.0 percentage point if adoption accelerates.

"Brazil's economy is showing resilience," added Luíza Pinese, XP Economist and co-author of the report. "This program is a powerful tool in softening the impact of global headwinds and tighter monetary conditions."

Link to full report: https://tinyurl.com/ypu8jjem

About XP Inc.

XP Inc. is one of the largest independent financial institutions in Brazil, owner of the brands XP, Rico, Clear, XP Educação, InfoMoney, among others. XP Inc. has over 4.6 million active clients and more than R$ 1.2 trillion in assets under custody. For the past 23 years, the company has been transforming the Brazilian financial market to improve people's lives. XP Inc. was a pioneer in the market with its network of investment advisors, which is now the largest in the country, with over 18,200 professionals. For more information, visit https://www.xpinc.com/

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SOURCE XP Inc.

FAQ

How much will Brazil's new payroll loan program impact GDP growth according to XP?

According to XP's research, the program will add 0.6 percentage points to Brazil's GDP growth, equivalent to BRL 70 billion (USD 11.7 billion) annually.

How many workers are eligible for Brazil's new payroll loan program?

The program extends eligibility to 47 million formal employees, including household and agricultural workers.

What are XP's revised GDP growth forecasts for Brazil after the payroll program launch?

XP revised Brazil's GDP growth forecasts to 2.3% for 2025 (up from 2.0%) and 1.5% for 2026 (up from 1.0%).

How much in loans has been granted through Brazil's new payroll program so far?

Over BRL 4.5 billion (approximately USD 750 million) in loans have been granted within weeks of the program's launch.

What are the two main economic effects of Brazil's payroll loan program according to XP?

The program works through a substitution effect (+0.35pp GDP) from replacing expensive debt with cheaper loans, and an incremental effect (+0.2pp GDP) from increased credit access.