Informality advances, but at a slower pace

Falling interest rates, the slow recovery of formal employment and activity are beginning to contain the more rapid growth of the informal economy.

Source: Estadão Content
08/08/2023

Falling interest rates, the slow recovery of formal employment and activity are beginning to contain the faster growth of the informal economy. Despite being on the margins of legality and the payment of taxes, the informal economy has played an important role in guaranteeing some income for the large mass of unemployed people that exist in the country today. In 2019, the informal economy advanced for the fifth straight year, but at a slower pace than the previous one. In the 12 months through June, the informal economy moved the equivalent of 17,3% of the country's Gross Domestic Product (GDP). It is still a very significant portion of the economy, the largest in the last eight years and corresponding to R$ 1,2 trillion. However, this year there is the first sign of a slowdown. That's what points Underground Economy Index (HEI), calculated by the Brazilian Institute of Economics (Ibre) of the Getúlio Vargas Foundation (FGV) in partnership with the Brazilian Institute of Ethics in Competition (ETCO). In the criteria used by FGV , shadow economy includes the production of goods and services not declared to the government to evade taxes and contributions, in order to reduce costs.

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