FGV: informal economy already exceeds R $ 650 billion in 2010


Source: Exame Portal - São Paulo / SP - 25/11/2010
25 March Street

The informal economy accounts for 18,6% of Brazilian GDP, according to FGV

After five consecutive years (between 2003 and 2008) growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not informed to the governments - starts to grow this year at the same speed as the country's formal economy , according to the Underground Economy Index.

With the 2009 revision and update for 2010, the indicator was released today by the Brazilian Institute of Competitive Ethics (ETCO), together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV). The total handled by the underground economy now exceeds R $ 650 billion in 2010.

According to the survey, the curve of the ratio of the index to GDP has stopped falling, showing a stabilization trend around 18,6%. "This means that, in the last three years, the underground economy has grown at the same rate as the Brazilian GDP, which is worrying for the country's economy," says the statement. The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010.

“The disclosure of absolute values ​​is essential to avoid having the mistaken view that the stabilization in relation to GDP is positive. Like 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. In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP.

In the evaluation of ETCO's executive president, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality. “On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other hand, income growth increases the consumption of goods and services, including those produced in the underground economy”. "The results released indicate that the second effect has been prevalent in recent years," added Montoro Filho.