Informal economy reaches R $ 656 billion


Source: O Globo Online - Rio de Janeiro / RJ - 24/11/2010

BRASILIA -The informal economy in the country reached a new mark in 2010, reaching the amount of R $ 656 billion. The 2010 Underground Economy Index, released today by the Brazilian Institute of Competitive Ethics (ETCO) and by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV), shows that informality is equivalent to 18,6% of the Gross Domestic Product and is growing in product speed. Over the past three years, it has remained stable in relation to GDP. In nominal terms, there was an increase of R $ 73 billion in the set of goods and services produced in the country outside the formal economy this year, compared to last year.

- The disclosure of absolute values ​​is essential to avoid having the mistaken view that stabilization in relation to GDP is positive. As in 2009, this year another R $ 656 billion should be left out of the formal Brazilian economy - says Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study.

The economist André Franco Montoro, president of the ETCO Institute, sees with concern this growth of the underground economy at the pace of GDP, especially in 2010, when the product will expand by more than seven percentage points. And he attributes the expansion to the lack of measures focused on reducing informality.

- It was expected. The causes that lead to informality are still there: high tax burden, increasing bureaucracy - he says. He considers that the most urgent and effective at the moment is to adopt measures to reduce bureaucracy.

In a report, the ETCO Institute and IBRE / FGV highlight that “informality, in addition to its relationship with organized crime and precarious working relationships, brings direct damage to society, creates an environment of transgression, stimulates economic behavior opportunistic with a drop in the quality of investment and a reduction in the growth potential of the Brazilian economy, in addition to causing a reduction in government resources for social programs and investments in infrastructure ”.