Despite the recession, informality grows for the first time in 12 years.
According to a study by the Brazilian Institute of Competitive Ethics (ETCO) and FGV/IBRE, the informal market generated R$ 957 billion in 2015, equivalent to 16,2% of GDP, an increase of 0,1 percentage point compared to the previous year.
SAO PAULO (Reuters) - Informality in the Brazilian economy grew in 2015 for the first time in at least 12 years, with the economic recession encouraging business dealings to avoid paying taxes, according to a survey released on Tuesday.
According to a study by the Brazilian Institute of Competitive Ethics (ETCO) and FGV/IBRE, the informal market generated 957 billion reais in 2015, equivalent to 16,2 percent of GDP, an increase of 0,1 percentage point compared to the previous year.
The sector's activity is measured by what the authors call the Underground Economy Index. Since its launch, the indicator has shown a gradual decline, falling from 21 percent of GDP in 2003 to 16,1 percent in 2014.
According to FGV/IBRE researcher Fernando de Holanda Barbosa Filho, the "underground economy" is deliberately not reported to the government in order to evade taxes and avoid social security contributions and compliance with laws, such as labor laws.
"With the economy and credit slowing down and the direct impact on formal employment, the space for informality is growing," Barbosa Filho told Reuters.
According to him, the outcome wasn't worse only because of measures to combat informality. But the trend for 2016 is for a renewed increase in informality.
"With the current economic scenario, this upward trend will undoubtedly continue," he added.
(By Aluísio Alves; Edited by Raquel Stenzel)