Source: Jornal do Comércio - RS, 15/05/2009

The underground economy, which encompasses practices such as informality and tax evasion, grew 27,6% between December 2007 and December 2008. It is the strongest advance in an annual period in the historical series of the index, which is quarterly and started in 2003. The result came from a survey conducted by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV) and the Brazilian Institute of Competition Ethics (Etco). According to the survey, the increase in the tax burden, combined with other factors, caused the underground economy to expand to the point of reaching 27,1% of GDP (Gross Domestic Product). Of the total growth rate of the index, 55,5% of the increase refers to the increase in the tax burden, which must have risen between 10% and 11% last year, according to data provided by Ibre / FGV. The level of economic activity, represented by unemployment, had an 18,8% share in the index between December 2007 and December 2008. Excessive bureaucracy and corruption, with 16,9%, also served as a stimulus for the underground economy .
In the last quarter of last year, a period in which the global crisis worsened, the underground economy grew 9,5% compared to the previous quarter - while the country's GDP fell 3,6% over the third quarter of 2008. “The underground economy it does not depend on credit and, therefore, she did not suffer from the crisis, in fact she even grew up with it ”, explained Fernando de Holanda Barbosa Filho, a full researcher at Ibre / FGV.
When presenting the results of the indicator, Holanda Barbosa Filho commented that, by observing the historical series, it is possible to notice that the underground economy indicator goes “side by side” with the progress of the formal economy. “We can see that, the greater the activity and the greater the GDP growth, the underground economy also grows together. The two economies (formal and underground) are growing in parallel. One feeds the other. The income earned in the formal economy is spent in the underground economy, and vice versa ”, he said, explaining that the GDP increases also indicate an increase in currency circulation in the country.

However, the growth of the shadow economy cannot be explained only by the influence of the formal economy. For Etco's president, André Franco Montoro, many companies or small entrepreneurs have also chosen to abandon the formal market as a way of not paying taxes.