Last year grey economy in Latvia increased by 1.6% YoY, reaching 25.5% of the country’s GDP, as reported by Stockholm School of Economics in Riga business center director Arnis Sauka at a press-conference dedicated to grey economy.
He said that the grey economy had increased since 2021 and this was not a good thing.
“If we fail to reduce grey economy in a time when the economy is in decline, it will be even harder to do when the economy drops because of Covid-19. I predict indexes of 2021-2022 will turn out worse than last year’s indexes,” said Sauka.
At the same time, the grey economy in Lithuania increased by 2.2%, to 20.4%, and in Estonia also by 2.2%, reaching 16.5% of GDP.
Looking at separate grey economy factors, in 2020 envelope wages composed 23.5% (+1.2%) and undeclared income composed 18% (+14%). The percentage of unofficially employed people composed 10.9%, unchanged since 2019.
The biggest grey economy share was observed in Kurzeme last year – 27.1%. In Riga it was 26.3%. The lowest was observed in Latgale – 19.2%.
The biggest grey economy presence was in the construction sector – 28.7%, down by 4.6%, and retail trade – 26.3%, down by 0.8%.
In the service sector the percentage of grey economy was 24.9% last year. In retail trade it was 23.9% and in production it was 23%.
Since 2009, grey economy in Latvia was the highest in 2010 (38.1% of GDP) and the lowest in 2016 (20.7% of GDP). It was followed by a surge in 2017 and 2018, as well as a slight drop in 2019.
In 2019, grey economy share in Latvia dropped by 0.3% and was 23.9% of GDP. (BNN/Business World Magazine)
