Brazil's Underground Economy reaches R $ 663 billion
Updated with the results of 2010, a study points to a volume of the underground economy of around R $ 663 billion, or 18,3% of the national GDP
On June 28, ETCO and the Brazilian Institute of Economics of Fundação Getulio Vargas (IBRE / FGV) released, once again, the Underground Economy Index, which brought the estimate for 2010, updated with the results of the year (GDP , inflation) and confirmed the trend of stabilization of the values generated by the informality already pointed out in November last year. After spending 5 years - between 2003 and 2008 - growing less than GDP, the curve of the ratio of the Index to GDP stopped falling, showing a stabilization trend at around 18,3%. This means that, in the last three years, the Underground Economy has grown at the same rate as the Brazilian Gross Domestic Product.
From the point of view of absolute values, the analysis of the results also presented a slight growth in relation to the forecast made in 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 2010, the forecast was R $ 656 billion.[table = 3]
Source: IBRE / FGV and ETCO
According to Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study, “the small variations observed in the last three years show a gradual and consistent reduction, but do not reflect a significant fall in the underground economy in Brazil”
For Roberto Abdenur, executive president of ETCO, “the Underground Economy Index calls on society and public authorities to reflect on the reasons for the current results, mainly taking into account the country's modernization process, which, undoubtedly, cannot live with more than R $ 663 billion generated outside the formal economy ”.
In his assessment, “it is possible to detect that, in parallel with the healthy advance 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 unfortunately it has also grown at the same rate ”.
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.
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