Jornal do Comércio - RS - Porto Alegre / RS - ECONOMY - 10/07/2013

O Globo Agency

The so-called underground economy, production of goods and services not reported to the government, corresponded to 16,6% of GDP in 2012, the lowest rate recorded in a decade. The mark was reached in the year in which the economy as a whole had an increase of only 0,9% and represents a decrease of 0,3 percentage point in relation to 2011. In values, it totaled R $ 730 billion, according to an estimate released on Wednesday by the Brazilian Institute of Competition Ethics (Etco) in conjunction with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV).

The strong job market, with the generation of formal jobs, explains this behavior, according to FGV / IBRE Applied Economics researcher Fernando de Holanda Barbosa Filho. "Informality falls systematically, even in years of crisis, which means that institutionally we are improving, but the smaller falls are signaling an exhaustion", he says.

ETCO's executive president, Roberto Abdenur, says, however, that although the picture is positive, Brazil is still far from international levels of informality, which are around 10%. He cites bureaucracy, insecurity in the economy, ignorance about the step by step to formalize and low schooling as factors that have also hampered formalization. "With the current level of indebtedness, there is a slowdown in credit, which seems to indicate the tendency of the rate to stay where it is, close to 16%", he evaluates.

Barbosa Filho also considers that the signs of job depletion, income and credit this year may impact the next results. “The economy is no longer helping as before. Credit expansion has stopped, and with that, part of the stimulus to formalize as well. The trend is not continuing. We need institutional change, reduce bureaucracy and deregulate the labor market, although this is highly unlikely to happen ”.

Research recently released by SPC Brasil and the National Confederation of Shopkeepers showed that almost half (49%) of the interviewees do not know what to do to regularize their business. In addition, among those who want to expand the business this year, the majority do not intend to formalize it because they fear bureaucracy, falling income and new costs.