FGV: without crisis, informal economy grew 27% in 2008 (Surplus)
Source: Surplus, 14/05/2009
Driven by the increase in the tax burden that caused companies to escape formality, the informal economy apparently went unscathed by the worsening of the global crisis and grew 27,6% in the period from December 2007 to December 2008. This is what this Thursday revealed Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV) and the Brazilian Institute of Competition Ethics (Etco), when announcing the Underground Economy Index, which measures the development of companies and activities involved in the informal market or in tax evasion practices. taxes. It was the strongest advance in a period from December to December of the historical series of the index, which is quarterly and started in 2003.
Informal data from the Brazilian Institute of Geography and Statistics (IBGE) were used to calculate the index, as well as information on monetary circulation from the Central Bank (BC).
When presenting the results of the indicator, the researcher from Ibre / FGV, Fernando de Holanda Barbosa Filho, commented that, by observing the historical series, it is possible to perceive that the underground economy (informal) indicator goes “side by side” with the advancement of the formal economy.
“We can see that the greater the activity and the greater the growth of the GDP (Gross Domestic Product), 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 beneficial 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.
According to the survey, of the total growth rate of 27,6% of the index, 55,7% of the increase refers to the increase in the tax burden, which must have risen between 10% and 11% last year. In Montoro's assessment, part of the responsibility for advancing the “underground economy” can be attributed to the government.
"The index clearly shows that reducing the tax burden could be one of the public measures that could be taken to include (the underground economy) in the formal economy," he said. According to him, studies show that, currently, the “underground economy” already represents around 20% to 30% of Brazil's GDP.
No crisis
The fact that the international crisis did not shake the advance of the “underground economy” last year also caught the attention of the researchers. Ibre / FGV researcher Samuel Pessoa explained that the decline in the supply of credit was one of the most damaging consequences of the global crisis within the formal economy, in the last quarter of last year. “But it hardly affected the shadow economy, because it doesn't use credit. We can say that the crisis hit the formal economy in full, but it did not affect the underground economy, ”he concluded.
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 Brazilian GDP fell 3,6%, on the same basis of comparison.
However, the next performance results of the underground economy, which will be related to the first quarter of 2009, may show a much less positive scenario. The director of Ibre / FGV, Luiz Guilherme Schymura, commented that the news about worsening in the labor market may signal less money circulating, and with this, a decrease in resources of the population as a whole to spend or to invest. He recalls that, in the last quarter of last year, the employment scenario had not yet been significantly affected by the crisis. “But it is still too early to make accurate estimates. We will wait to see what will happen ”, he said.