Bulgarian Finance Ministry Estimates Shadow Economy at 20% of GDP

Business | August 3, 2011, Wednesday // 17:48|  views

The Bulgarian Finance Ministry is to publish a final estimate of the size of the parallel economy in the country in September. Photo by BGNES

Grey economy has generated a parallel output worth 20% of Bulgaria's official official gross domestic product (GDP) for the period 2000 - 2009, according to a survey conducted by the Finance Ministry.

The full results of the detailed institutional analysis of the size of the shadow economy in the country is to be published in September, according to a publication in Dnevnik daily.

Experts at the Finance Ministry have explained that the estimates are made on the basis of energy consumption in Bulgaria.

The model is premised on the notion that rising power consumption is indicative of real economic growth, regardless of officially reported figures.

To illustrate the theory, if energy consumption rises by a higher percentage than the reported economic growth (inflation adjusted), this circumstance is attributed to illegal economic activity.

The Finance Ministry has conceded that the original methodology has its weak sides because it fails to take into account changes in power consumption rates resulting from the advent of hi-tech products.

This is why the final results of the survey will be subjected to further processing and will be revealed in September.

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Tags: electricity, gross domestic product, GDP, shadow economy, Finance Ministry, economic growth


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