World Economy

IMF Announces Share of Shadow Economies in GDP

Switzerland has the smallest ratio with 7.2% of GDP.Switzerland has the smallest ratio with 7.2% of GDP.

The shadow economy in Jordan accounted for 17.38% of the GDP between 1991 and 2015, according to the International Monetary Fund.

In a paper titled “Shadow Economies Around the World”, the IMF showed that the kingdom’s shadow economy’s part in the GDP ranged between 13.44 and 21.12% during the 20 years targeted in the study, the report said, as cited by the Jordan news agency, Petra.

The paper, which covered 158 countries, also showed that the ratio of the informal economy to the GDP took a downtrend starting from 2004.

However, the real volume of the shadow economy might be higher than that shown in the study in some countries like Jordan, Lebanon and Turkey as the impact of hosting refugees was not measured.

At the Arab countries level, the study indicated that the shadow economy in Qatar reached 15.93%, Saudi Arabia 16.56% and in Syria 19.58%.

The ratio was found to be significantly higher in Egypt (34.24%), Morocco (34.1%), Lebanon (31.58%), Algeria (30.86%) and the UAE, where it reached 26.54% in the same time span.

The global average reached 31.9%, with the country having the smallest ratio being Switzerland, with 7.2% of the GDP, followed by Austria (8.9%), the study indicated.

The highest ratio in the world was recorded in Bolivia (62.3%) and Zimbabwe (60.6%). The decrease of the grey economy reflects the country’s ability to regulate and monitor economic activities, reduce tax evasion and therefore improve the ability to estimate the GDP with more accuracy.

By estimating the extent of tax evasion, countries are also better equipped to control it.

The total economic activity, including official and unofficial production of goods and services, is important in designing economic policies that respond to fluctuations and economic development over time and across space, according to the paper.

The study based its method on a mix of approaches which include studying sectors, currency demand and the Multiple Indicators, Multiple Causes approach.

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