Underground economy grows 4,7% more than formal GDP


Source: BandNews FM, 19/11/2008

The economy that evades tax and has no formal contract, the so-called underground, grows 4,7 percent more than the formal GDP. The Getúlio Vargas Foundation Index shows that informality, piracy and smuggling have increased in the last six months. The president of the Brazilian Institute of Ethics in Competition says that bureaucracy and the tax burden contributed to this result. André Montoro Filho highlights the need for public policies to combat the underground economy. He also says that the increase in the economy that evades tax and has no formal contract prevents good investments. For FGV economics professor and researcher, Fernando Barbosa Filho, the growth of the underground economy does not exclude that of the formal economy. He also highlights that the economic slowdown will cause layoffs in the formal and underground economy. According to him, the financial crisis has not yet affected the country's jobs.