O Globo - Rio de Janeiro / RJ - FIRST NOTEBOOK - 29/06/2011

The underground economy, which includes the production of goods and services not reported to the government, moved R $ 663,4 billion in 2010. The amount corresponds to 18,3% of GDP, points out the Underground Economy Index released yesterday by the Brazilian Institute of Ethics Competitive (Etco) and calculated by Fundação Getulio Vargas (FGV) based on the demand for currency and data from the IBGE on the labor market. The percentage remained close to that determined in 2009 and 2008 (18,5% and 18,7%), which reveals that the informal economy has remained practically at the same level for three years. The indicator had been falling more strongly until 2008.

From 2003 to 2008 the size of the shadow economy in proportion to GDP had fallen from 21% to 18,3%. FGV researcher Fernando de Holanda Barbosa Filho says that this may mean that an important part of the economy has already been formalized and that, from now on, the process will be slower. According to him, the expectation for 2011 is a gradual fall.

- The underground economy is growing slightly less than the formal economy. But the only way to have an abrupt drop would be by institutional changes in factors that stimulate this economy, such as the strong tax burden and high labor costs in the country - says Barbosa Filho.

The economist also mentions the high corruption in the country and the drop in the share of manufactured items in exports as factors that prevent a further reduction in the size of the underground economy. On the other hand, the heated economy drives the formalization, required for access to credit by companies and individuals.

Handled volume is still very significant

Carlos Thadeu de Freitas, CNC's chief economist, says that the increase in computerization and the use of plastic money (cards) has also hampered the expansion of informality. For Freitas, the improvement in income is another favorable point, as it leads to the consumption of more sophisticated services.

The fact, emphasizes Etco, is that the absolute volume moved by the underground economy is still very high. The total calculated in 2010 exceeded the forecast released last November by the institution, of R $ 656 billion. It is also higher than the R $ 632,9 billion in 2009.

- The shadow economy has not grown as much as GDP, but it has not decreased. If the country maintains a satisfactory pace and improves tax and labor legislation, which is an unknown quantity, there will still be a long way to go before reaching levels in European and US countries - says Etco's executive president, ambassador Roberto Abdenur.