Source: Jornal do Commercio - PE - 22/07/2010

SÃO PAULO - The underground economy, known as the informal economy, represented 18,4% of the Gross Domestic Product (GDP) in 2009, equivalent to R $ 578,4 billion, compared to 21% of GDP in 2003. This is the result of an unprecedented study that calculates the Underground Economy Index, carried out by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre-FGV) and commissioned by the Brazilian Institute of Competition Ethics (Etco). According to the person responsible for the study, professor Fernando Holanda Barbosa Filho, the indicator tries to measure all the production of goods and services that has not been communicated to the government.

According to Barbosa Filho, the main factors responsible for the reduction of the underground economy in Brazil are the increase in GDP growth, the increase in the number of people formalized in the labor market and the expansion of the granting of credit to workers. Other important elements are related to the modernization of the economy, greater commercial opening, with the advance of exports, and the evolution of collection systems, such as electronic invoices. The reduction of tax bureaucracy, with the establishment of the Super Simples regime, also contributed to the reduction of the informal economy in the country.

“GDP growth is a holy remedy”, commented Luiz Schymura, director of Ibre. According to him, the expansion of the activity level allows institutional improvements in the country, such as the search for greater productive efficiency and the increase in formalization in the labor market.

In Barbosa Filho's opinion, if Brazil grows around 7% this year, as predicted by President Luiz Inácio Lula da Silva, it is "feasible" that the underground economy index reaches the 18% of GDP mark at the end 2010. “The expectation is that, with the continuation of the country's expansion, the underground economy will continue to fall”. According to those responsible for the research, informality in Brazil still reaches high levels, because, in the member countries of the Organization for Economic Cooperation and Development (OECD), the rate is around 10%. "The informal economy in Brazil is roughly equivalent to Argentina's GDP," said André Franco Montoro Filho, executive director of Etco. According to him, in other Latin American countries this level is around 30% of GDP.