São Paulo, June 28, 2011 - The Underground Economy Index released today by the Brazilian Institute of Ethics in Competition (ETCO) together with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV), with the update of the 2010 results (GDP, inflation) confirms the stabilization trend already pointed out by the two institutions in November last year. After spending 5 years - between 2003 and 2008 - growing less than GDP, the underground economy grew at the same rate as GDP and the curve of the ratio of the Index to GDP stopped falling, showing a stabilization trend in the 18,5%. This means that, in the last three years, the Underground Economy has grown in the same proportion as the Brazilian Gross Domestic Product.

From the point of view of absolute values, the analysis of today's results still shows a slight growth in relation to the forecast of November: R $ 663 billion are produced in the Brazilian Underground Economy, which comprises the set of activities related to the production of goods and services deliberately not reported to governments. In November, the forecast was R $ 656 billion.

Size of the Underground Economy

Source: IBRE / FGV and ETCO

"It is worth mentioning that the small variations observed in the last three years do not reflect a relevant drop, but only the necessary adjustments to each update of the study", comments Fernando de Holanda Barbosa Filho, researcher at Ibre / FGV and responsible for the study.

According to the newly appointed executive president of ETCO, Roberto Abdenur, the Underground Economy Index “calls upon society and public authorities to reflect on the reasons for the current results, mainly taking into account the country's modernization process, which, without doubt, it cannot live with more than R $ 663 billion generated outside the formal economy ”.

“It is possible to detect that, in parallel with the healthy progress of the Brazilian economy - which has been going through a process of institutional modernization and increased consumption of goods and services, thanks to the growth in income - the acquisition of products generated in the underground economy also unfortunately , grown in the same proportion ”, evaluates Abdenur.

Informality, in addition to its relationship with organized crime and precarious working relationships, brings direct damage to society, creates an environment of transgression, and encourages opportunistic economic behavior, with a drop in the quality of investment and a reduction in the potential for growth of the Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.