Brazil still has Sweden in the underground economy


Mirian Leitã, O Globo - - 10.7.2013

The good news is that the so-called underground economy has been dropping since 2003, as shown by the data released today by the Brazilian Institute of Competition Ethics (ETCO) and by Ibre / FGV. That year, it was 21% of GDP and, in 2012, it was 16,6%. This last figure represents a reduction of 0,3 points in relation to 2011. The bad news is that in the last two years, the rate of decline in the underground economy, which captures not only informality, but also the production of goods and services reported to the government, which is outside GDP, has been decreasing.

Economist Fernando de Holanda Barbosa Filho, from Ibre / FGV, explains why this has been happening:

- This slowdown is basically due to the decline in formal hires by the industry and the growth of the service sector, which is labor intensive and very dynamic, but has higher levels of informality than the industry. But in general, despite the reduction in the rate of decline of the index, the result is still positive, as it is necessary to take into account that, even with the low performance of the economy in the year, informality continues to fall - he said.

The size of the shadow economy is estimated at more than R $ 730 billion, according to FGV, which is equivalent to Sweden's GDP.

According to the executive chairman of Etco, Roberto Abdenur, despite the government's efforts to create measures to facilitate formalization, membership levels in the commerce and services sectors, where small entrepreneurs predominate, are still very low.

- Since the end of 2012, it has been observed that the growth of the formal labor market has reached its limit due to two major factors: the rigidity of labor laws and the low level of education of the Brazilian - says Abdenur.