IMF: Informal economy in Greece grew during the economic crisis era

IMF: Informal economy in Greece grew during the economic crisis era

Tax revenues, social benefits and employment in Greece are significantly affected by the size of the informal economy, which accounts for approximately 30% of the total economy. Indeed, the levels of underground economy might have dropped throughout Europe in recent years, yet its size remains noteworthy, especially in Eastern Europe and Greece.

This is what the latest IMF report points out, in which the Fund’s technocrats underline the need for a comprehensive reform package focused on country-specific drivers to successfully combat informal economy, as it is detrimental to reducing taxation.

Europe

As for the percentage of underground economy, this appears significantly high in several European countries, ranging from less than 10% to over 40% of GDP. For Greece it stands at about 30%. In countries with a better economy, informal economy usually fluctuates between 10% and 20% of GDP on average.

In terms of developing economies, those are reported to have higher levels of underground economy, that is, around 30% to 35% of GDP on average. The size of informal economy goes over 40% of GDP in most countries and even higher in some cases.

The average size of informal economy in Europe has generally plateaued since the mid-2000s. In many countries, underground economy has grown since the early 2000s (as is the case for countries such as Croatia, Cyprus, Greece and Serbia), while in others it has decreased (Czech Republic, North Macedonia).

In most countries, underground economy grew mainly between 2008 and 2010 and then dipped just before the economic crisis. The size of the informal economy is smaller in the more developed countries.

Greece is among those countries that have experienced a surge in the percentages of informal economy, especially during the economic crisis era. /ibna