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The first thing a salesperson does when a customer walks into a store is ask whether she'd like to pay in instalments.

Anything at all can be financed in Brazil: shoes, purses, groceries, medicine, and especially larger items like electrical appliances, televisions, cellphones and vacations.

Brazil's emerging middle class is hooked.

The clothes and the gadgets are irresistible signs of their new status, and the 100-per-cent interest rates built in to some of the instalment schemes are the price they're willing to pay to improve their day-to-day lives.

The fledgling middle class here, as in emerging markets around the world, has sprouted and thrived in the past decade.

In Brazil, the group even has an official name as part of an income-bracket classification by the government: Class C.

A group of more than 86 million people with earnings averaging about $500 (U.S.) a month, it's the fastest growing income group in Brazil, by a long shot. Class C has grown by about 20 million people in the last two years.

And the newly comfortable in this country have quickly adopted some of the bad habits of the advanced world, including their penchant for consuming on credit.

Now, as the rest of the world looks to the huge pool of consumers in emerging markets as a route to global economic recovery, the credit habits of Brazilians have suddenly become a concern.

While Brazil's economy overall can likely continue growing next year, albeit at a reduced pace, the emerging middle class that the rest of the world hoped would buy their products is succumbing to the global crisis - precisely because it is a crisis of credit, the lifeblood of Brazil's new consumers.

"It's very vulnerable because they were living on credit, and credit has disappeared," said leading Brazilian economist Eliana Cardoso, from the Getulio Vargas Foundation, in an interview.

The personal debt of Class C households has increased about tenfold in 10 years, and these households are now the leading source of borrowing in Brazil, replacing industry. Each Brazilian has an average of three credit cards, with the number of credit cards growing from 199 million in 2000 to 484 million in 2008.

"This increased consumption in Brazil is sailing on a sea of easy credit, part of the worldwide proliferation of financial assets," says economist Norman Gall, executive director of the Fernand Braudel Institute of World Economics, in a recent essay on the roots of the global financial crisis and its effect on Brazil.

For Rita Couto, the credit boom of the past decade has meant good times. She migrated from the dirt-poor north of Brazil about 20 years ago with her children, and moved into the shack her husband had built from scraps in a slum on the edge of Sao Paulo.

Now, thanks to a raise that her factory-worker husband got a few years ago, and careful money management, her house has been reinforced by concrete blocks, covered in stucco, and decorated inside from top to bottom in ceramic tile. Even the ceilings.

She's got a fridge with a freezer, a stove, a television, a CD player, and a new pine cupboard for her dishes. Smaller appliances are all covered lovingly in orange doilies crocheted by Mrs. Couto herself. Her last purchase, that she just finished paying off, was a wardrobe for her bedroom. Next on the list is a washing machine. "Thanks be to God," she says, serving a homemade coconut loaf and freshly squeezed orange juice. "We are much better off now."

Mrs. Couto is one of the 20 million Brazilians who have moved from low-income levels to what is considered middle class - not by Canadian standards, but by the ranking popularized within Brazil.

She is proudly part of Class C. Like many others in her neighbourhood, Mrs. Couto has overcome incredible adversity, graduating from a life dominated by poverty, neighbourhood violence and uncertainty to one where she can think about what kind of shoes she wants. Her daughter, Jussara, just finished university and has bought her own little house downtown, far from the slum she grew up in. She has similar hopes for her sons.

It's a fragile prosperity. Class C households buy 40 per cent of the computers sold in Brazil, and about half of these households have Internet access. In addition to buying millions of fridges, TVs and other appliances, they have driven growth in the all-important auto industry. Brazil has doubled its motor vehicle production since 2000, and has sold more cars in the first half of 2008 than in all of 2003.

But these households have done it on debt. And the credit-crunch wave has only just begun to wash up on Brazil's shores.

The stock market has plummeted more than 60 per cent since last spring, with huge losses in the past few weeks. The currency has plunged, and the central bank has had to intervene with more than $50-billion (U.S.) in the past few weeks to prop it up - but has also stopped raising its key interest rate to fend off inflation.

"If you look in the rear-view mirror, life looks good. In October, everything changed," says the economist Ms. Cardoso.

Infrastructure projects are begging for emergency loan guarantees from the government as they scramble to find ready financing, and building slows to a crawl. The government has relaxed banks' capital requirements, and fiddled with rules for financial institutions to allow for more consolidation.

Car sales fell 11 per cent in October, after three years of growth. General Motors is shutting down two of its three Sao Paulo plants, and scaling back at the third.

But most importantly for the new middle class, the instalment scheme that underpinned the shopping binge of the last decade is under pressure. Car dealers and vendors of appliances are cutting back on the number of payments customers can stretch out for their purchases. Key department stores are more discriminating about who will get credit.

And as banks increase the rate they charge their best customers, the chances of Mrs. Couto being able to afford that new washing machine become more remote - unfortunately for the foreign companies that often help make the appliances.

But the Brazilian economy is not dealing with the real estate problem that has undermined economies in North America and Europe, notes Patricia Guedes, a social scientist at the Fernand Braudel Institute who has researched the debt patterns of Brazil's middle class.

Many of the new entrants into Class C, such as Mrs. Couto, own their houses because they built them from the ground up, Ms. Guedes explained in an interview. And banks in Brazil have never fully embraced the mortgage culture found elsewhere in the world. "Neither the private sector nor the public sector offered attractive conditions in order to improve or buy new homes," she said. "Most home improvements are financed through savings."

That fact could put a floor under the damage caused by the global credit crunch, she said. And consumers who default won't lose anything except the latest household items they still owe money on.

"No one will come and take their TV away," Ms. Guedes said.

Most economists say that at a macro-economic level, Brazil has the wherewithal to withstand a global recession. Its foreign reserves are large, its banking system fairly stable, and its domestic demand strong enough to maintain growth next year.

But the capacity for fiscal stimulus is minimal - the government can't afford big rescue packages - and consumers are already pulling back. Hopes in the rest of the world that the budding middle class of Brazil will be able to make up for the drooping middle classes of North America and Europe are misplaced, says Ms. Cardoso.

"The U.S. is much too big, much too important for one to think that emerging markets have the capacity to turn the world around," she said.

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Brazil: country of credit

• Population: 196.3 million
• No. of credit cards: 484 million
• One-year rise in number of credit cards: 14%
• One-year rise in credit card transactions: 21%
• Credit card revenue in August: $10.6-billion
• Central bank interest rate: 13.75%

Economic snapshot

• Unemployment rate: 7.5%
• CPI: 6.4% (10/08)

Imports

• Machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics

Import partners

• United States: 19.9%
• China: 9.2%
• Argentina: 8.1%
• Germany: 7.6% (2007)

Exports

Transport equipment, iron ore, soybeans, footwear, coffee, autos

Export partners

• United States: 14.1%
• China: 9.5%
• Argentina: 8.3%
• Germany: 4.4%
• Netherlands: 4.3% (2007)

Sources: Brazilian government, Bloomberg, CIA World Factbook