Spain ranks, along with Greece and Italy, among the European countries with the highest weight of the underground economy. In Spain, black money represents 24% of Gross Domestic Product, just behind Greece – at 36% – and Italy, at 31%, respectively.
These are the figures recently published in a report for the Centre for Economic Policy Research (CEPR), prepared by authors Francesco Pappadà, a professor at the University of Venice, and Kenneth Rogoff, a professor at Harvard University. Despite this percentage, as reflected in this report, it is difficult to be more precise regarding the weight of the underground economy in a country’s economy since it is “practically impossible” to provide exact figures on the cash that circulates in the world.
Thus, the most approximate data certifies that it accounts for 17% of GDP in advanced economies and 33% in developing economies and emerging markets. On the opposite side are countries with levels below 10%, such as Austria (0.9%), Denmark (0.9%), Estonia (0.8%), Slovenia (0.7%), Sweden (0.6%), and Belgium (0.5%).
As the authors themselves explain, the method used was based on a cross-analysis of VAT data and consumption surveys. By considering goods and services traded internationally that are not subject to VAT and assuming there is no tax evasion in public services, they obtained estimates of the underground economy by country (not taking into account illegal activities).
